Pound to Euro (GBP/EUR) Exchange Rate Rangebound as EU Hardens Stance on British Fisheries

GBP/EUR Exchange Rate Steady as EU Fisheries Stance Compromises Post-Brexit Trade Deal Hopes

The Pound to Euro (GBP/EUR) exchange rate held steady this morning, with the pairing is fluctuating around €1.099 at the time of writing.

Sterling has come under pressure today following news that the European Union (EU) had hardened its stance on UK fisheries.

Tony Connelly, the Europe Editor at RTE, said that European ministers had demanded Michel Barnier, the EU’s Chief Brexit Negotiator, to secure full access to UK waters.

Mr Connelly said:

‘Under the terms of the future relationship negotiations, there can be no overall free trade agreement unless there has been a deal on fisheries. It is understood member states are pushing Mr Barnier to use the leverage provided by the precondition that a free trade agreement (FTA) cannot be concluded without a side deal on fisheries.’

As a result, GBP investors have become concerned that this could compromise the chances of a post-Brexit trade deal between Downing Street and the EU.

In UK economic data, today saw the release of September’s Halifax House Prices, which rose month-on-month by 1.6%.

Russell Galley, the managing director of Halifax, was confident the housing sector would improve in the months ahead, saying:

‘It is highly unlikely that the housing market will continue to remain immune to the economic impact of the pandemic.’

Euro (EUR) Rangebound as Germany’s Industrial Production Data Disappoints

The Euro (EUR) struggled to gain this morning after Germany’s latest Industrial Production data for August fell below forecasts from 1.4% to -0.2%.

As a result, EUR investors are becoming concerned about the months ahead for the Eurozone’s powerhouse economy.

Analysts at Reuters commented on the report:

‘German industrial output edged down in August following three months of relatively strong increases, suggesting the recovery in Europe’s largest economy from the coronavirus shock is starting to lose steam.’

Euro (EUR) traders are remaining cautious as the number of Covid-19 infections continues to rise throughout much of mainland Europe.

Consequently, this has sparked concerns that the Eurozone’s economic growth could be seriously set back in the months ahead.

Today will see a speech from the President of the European Central Bank (ECB) Christine Lagarde. Any dovishness about the Eurozone’s economic performance would be EUR-negative.

GBP/EUR Outlook: Could Brexit Loggerheads Drag Down Sterling This Week?

Euro (EUR) investors will be eyeing tomorrow’s publication of August’s German Trade Balance report.

Any further signs of a compromise to Germany’s economic health would prove EUR-negative.

Pound (GBP) traders will be looking ahead to tomorrow’s speech from the Bank of England’s (BoE) Governor Andrew Bailey.

If he is notably downbeat in his assessment of Britain’s economy then GBP would suffer.

The GBP/EUR exchange rate will continue to be influenced by Brexit developments this week. Any indications that the UK and the EU could once again be at loggerheads over Brexit would drag down Sterling.

David Moore

Contact David Moore