GBP/EUR Exchange Rate Slips as EU Prepares to Publish No-Deal Brexit Plans

GBP/EUR Exchange Rate Undermined by Brexit Jitters

The Pound to Euro (GBP/EUR) exchange rate is trending lower this morning as Sterling sentiment is buffeted by fresh Brexit uncertainty.

At the time of writing the GBP/EUR exchange rate is trading at around €1.1165, slightly down from this morning’s opening levels.

Pound (GBP) Retreats as EU Gears Up for No-Deal Brexit

The Pound (GBP) finds itself on the back foot against the Euro (EUR) and majority of its other peers this morning, in light of renewed concerns over Brexit.

This follows a report from The Times, which suggests that EU leaders will press the European Commission publish to begin publishing its no-deal plans.

The demand comes as EU leaders grow increasingly concerned that deadlines for negotiations keep getting pushed back, leaving less and less time for governments and businesses to prepare for the worst-case scenario.

A senior EU diplomat said:

‘We must now come up with contingency measures. January 1, 2021 is getting close; we need a safety net.

‘Of course, this sends out a political signal. But it is high time to prepare people and businesses in case we cannot fix an agreement in time. I know member states will ask to get contingency measures out into the open.’

Reports emerged earlier this week that a post-Brexit trade deal could be reached ‘early next week’, but in light of today’s news GBP investors appear far less confident.

Euro (EUR) Capped by Lagarde’s Warning on the Coronavirus

The Euro (EUR) is struggling to capitalize on the Pound’s (GBP) weakness this morning, following a sober speech by European Central Bank President Christine Lagarde.

Testifying to the European Parliament’s committee on economic and monetary affairs, Lagarde warned that the second wave of coronavirus infections pose a major threat to the Eurozone economy.

Lagarde, said:

‘Overall, the euro area economy is expected to be severely affected by the fallout from the rapid increase in infections and the reinstatement of containment measures, posing a clear downside risk to the near-term economic outlook.’

In addition, Lagarde urged EU leaders to push through its new budget, which was derailed by vetoes from Hungary and Poland earlier this week.

GBP/EUR Exchange Rate Forecast: Barnier’s Brexit Update in Focus

Looking ahead to the end of this week’s session, its highly likely that Brexit headlines will continue to act as the main catalyst of movement in the Pound to Euro (GBP/EUR) exchange rate.

In particular focus will be EU Chief Negotiator Michel Barnier‘s update on the state of Brexit talks to EU leaders on Friday, which could provide some support to Sterling if he strikes an optimistic tone.

Also influencing GBP exchange rates on Friday will be the publication of the UK’s latest retail sales figures, with the Pound likely to face some pressure at the start of the session amidst forecasts sales growth will have stalled in October.

Meanwhile, in focus for EUR investors will be the release of the Eurozone’s preliminary consumer confidence index.

November’s figures are expected to reveal that household morale tumbled, with surging coronavirus cases and new lockdowns across Europe, likely to have taken a heavy toll on confidence.

Matthew Andrews

Contact Matthew Andrews