GBP/EUR Exchange Rate Firms in spite of Brexit Uncertainty
The Pound to Euro (GBP/EUR) exchange rate is rallying this morning, recouping its losses from the start of the week despite a continued focus on Brexit.
At the time of writing the GBP/EUR exchange rate is trading at around €1.1966, rising around 0.4% from this morning’s opening levels.
Pound (GBP) Buoyed as EU to Agree on Trade Mandate
The Pound (GBP) is ticking higher against the Euro (EUR) and the majority of its other peers this morning, as GBP investors appear unfazed by lingering fears of a no-deal Brexit.
This comes as EU ministers meet today to agree upon their negotiating mandate for the upcoming trade talks with the UK.
Brexit: EU set to agree UK trade talks mandate https://t.co/M86ugcSJY0
— BBC Politics (@BBCPolitics) February 25, 2020
UK-EU trade negotiations are expected to get underway next month.
EU officials are thought to be worried about the potential for Boris Johnson to backtrack on some of the pledges made as part of the UK’s withdrawal deal and will seek insurances that the UK will abide by its promises.
Michael Roth, Germany’s Europe minister warns:
‘My message is crystal clear to our friends in London – keep your promises, based on the protocol.
‘The political declaration is key for us. It’s the basis for further negotiations between the EU and the United Kingdom and there are no doubts that we remain committed to the political declaration.’
The UK is expected to publish its own negotiating plans on Thursday.
Euro (EUR) Weakens as Markets Spooked by Italy’s Coronavirus Outbreak
At the same time, the Euro (EUR) has opened today’s session on the back foot as markets grow increasingly concerns about the coronavirus’s impact on the Eurozone.
This comes as Italy is battling a major outbreak of the Covid-19 disease, with over 220 confirmed cases and seven deaths, and reports that the first coronavirus case has now been confirmed in the south of the country.
Josh Mahony, senior market analyst at IG comments:
‘What was largely a Chinese issue to resolve has soon become an international problem, with European eyes transfixed on Italian efforts to curb the spread of the virus.
‘With European borders open and the Italian ‘patient zero’ still unknown, things could easily turn from bad to worse in the efforts to keep the coronavirus at bay.
‘With tourism to and from China plummeting, there is little reason to expect any different in Europe if this virus spreads throughout the continent.’
EUR investors are also concerned about how the slowdown in China will hit the Eurozone’s already struggling manufacturing sector given how it will disrupt supply lines.
GBP/EUR Exchange Rate Forecast: Lagarde to Offer More Insight into ECB Policy?
Looking ahead, movement in the Pound to Euro (GBP/EUR) exchange rate in the mid-week may be dictated by a speech from European Central Bank (ECB) President Christine Lagarde.
It’s thought that Lagarde will likely touch on the coronavirus and its potential impact on the Eurozone economy, with the Euro likely to stumble if she stokes speculation that the coronavirus may force the ECB to lower interest rates in the foreseeable future.
For GBP investors the focus is likely to remain on Brexit, where uncertainty regarding the upcoming trade talks could infuse fresh volatility into Sterling.