The Pound to Euro (GBP/EUR) exchange rate fell this morning, with the pairing currently trading around €1.102.
The Pound (GBP) struggled this morning as Brexit trade talks are expected to come to an end this afternoon with a no-deal seeming increasingly likely. Prime Minister Boris Johnson claimed in a statement that talks were in a ‘serious situation.’
Speaking to the European Parliament this morning, Michel Barnier has warned there are “just a few hours” left to strike a post-Brexit trade deal.
Continuing his warning Mr Barnier stated:
‘We have very little time remaining, just a few hours, to work through these negotiations in useful fashion if we want this agreement to enter into force on 1 January. There is a chance of getting an agreement but the path to such an agreement is very narrow.’
The two sides continue to clash over whether Brussels will be able to hit British goods with tariffs if the government closes its fishing waters to EU fishing fleets in the future.
In other news, retail sales in the UK fell 3.8 percent in November of 2020, though a drop, the figures were better than expected. Despite the monthly fall, overall sales remain above their pre-pandemic levels.
ING economist James Smith said:
‘Despite lockdowns across most of the UK, the level of spending is still higher than where it was in August, and comfortably above its pre-virus level.’
Euro (EUR) Gains on Positive Ifo Business Climate Index
The Euro (EUR) gained today following the release of the Eurozone’s biggest economy Germany’s Ifo Business Climate Index.
The Ifo Business Climate indicator for Germany went up to 92.1 in December of 2020 from an upwardly revised 90.9 in the previous month, beating market forecasts of 90.
This was in spite of the country entering another strict lockdown to slow down the second wave of Covid-19 before Christmas.
Ifo president Clement Fuest said:
‘Companies were more satisfied with their current business situation. They were also less sceptical about the coming six months. While the lockdown is hitting certain sectors hard, overall the German economy is showing resilience.’
With Europe on course for approving the rollouts of the Covid-19 vaccine, EUR traders are becoming increasingly optimistic about the Eurozone’s economic recovery into 2021.
GBP/EUR Forecast: Sterling could plummet on the back of no-deal Brexit
Pound (GBP) traders will be awaiting any Brexit trade talk updates throughout the day, with hopes that another extension may yet be announced.
But with time running out for the UK-EU to find a post-Brexit trade deal, traders become increasingly nervous for the Sterling.
Though the GBP/EUR exchange rate could gain from its losses, if UK-EU Brexit talks show any further signs of compromise.