GBP/EUR Exchange Rate Edges Higher as UK Vaccine Rollout and Brexit Hopes Boost Sterling
The Pound to Euro (GBP/EUR) exchange rate rose by 0.2% today, with the pairing currently trading around €1.106.
Sterling headed higher today as UK-EU Brexit negotiations are looking more promising.
Downing Street now appears more willing to compromise on fishing rights, one of the key outstanding issues in talks between the two sides.
Michael Gove, the Chancellor of the Duchy of Lancaster, commented:
‘I think there can be scope for compromise, but the compromise exists on the way in which European boats can continue to access UK waters.
‘Now, I think we can be very generous with that. I think that we can reach arrangements with European countries that allow a staged process so there can be a degree of certainty, so that they can manage that.’
As a result, UK markets have become more confident that the UK and the EU could secure a trade agreement before the end of the year.
Meanwhile, Britain’s rollout of the Covid-19 vaccine has boosted optimism in the nation’s economic recovery.
Neil Wilson, an analyst at Markets.com, said that news from Oxford University and AstraZeneca confirming the safety and effectiveness of the vaccine had ‘further underpinned confidence in the reopening trade’.
Meanwhile, Richard Hunter, Head of Markets at Interactive Investor, commented:
‘Alongside a roll out which has now begun in the UK, expectations are increasing for a relatively early solution to the human and economic problems which the pandemic has caused.’
Consequently, we could see the GBP/EUR exchange rate continue to head higher throughout today’s session as the outlook for the British economy improves.
Euro (EUR) Falls as Outlook for Eurozone Economy Remains Largely Mixed
The Euro (EUR) dipped today following the release of the German Exports data for October, which fell below forecasts from 2.3% to 0.8%.
Analysts at Reuters were optimistic about the Eurozone’s powerhouse economy, however, saying:
‘German exports rose less than expected in October but foreign trade still gave Europe’s largest economy a boost at the start of the fourth quarter as it struggles to avoid slipping into a double-dip contraction.’
Nonetheless, the long-term outlook for the German economy remains largely mixed, with November’s partial lockdown clouding confidence in the economy.
We could see the German economy stagnate or fall in the final three months of the year.
Yesterday saw some confirmation of an improving outlook for the Eurozone’s largest economy, however, with the German ZEW Investor Confidence gauge jumping to 55.0.
GBP/EUR Outlook: Could a Brexit Breakthrough Send Sterling Higher?
Euro (EUR) traders will be awaiting tomorrow’s interest rate decision from the European Central Bank (ECB).
However, the Bank is expected to hold rates at 0%.
But if the ECB is notably downbeat about the Eurozone’s economic future, then we could see the Euro suffer.
Pound (GBP) traders will be awaiting tomorrow’s release of the UK Manufacturing Production data for October.
Any improvement in the UK’s industrial or manufacturing sector would prove GBP-positive.
Brexit will remain in focus, however.
If talks continue to show signs of improvement, with both sides conceding on crucial issues, we could see Sterling head higher.