GBP/EUR Exchange Rate Rangebound on Renewed Hopes of a Brexit Deal
The Pound to Euro (GBP/EUR) exchange rate steadied today, with the pairing currently trading around €1.10.
Sterling stabilised today following news that Ursula von der Leyen, the European Commission’s President, has taken control of Brexit talks to strike a deal before Christmas.
The EU’s Chief Negotiator, Michel Barnier, said that the UK and EU were making progress on fishing rights, adding that the was now ‘political willing on both sides to get this over the line’.
A senior EU diplomat commented:
‘Most issues are preliminarily closed or close to being agreed.
‘EU negotiators are in a last push now to make progress and to clinch a deal acceptable for both sides. The EU will not close its door to the UK and remains ready to negotiate even beyond 1 January.’
As a result, GBP has benefited from growing hopes that the two sides could secure a post-Brexit trade agreement either before Christmas or January 1st.
Euro (EUR) Steady as France Eases Stance on Lorries and Goods
The Euro (EUR) held steady today as markets are relatively quiet ahead of Christmas Day.
However, confidence has returned to the Eurozone economy following news that the French government would ease its ban on hauliers and lorries from the UK.
David Madden, an analyst at CMC Markets, explains:
‘The French government started to soften its stance with respect to the two-day passenger and goods ban and that set the tone in European markets yesterday.
‘The fears of the UK being cut off from the rest of Europe faded [yesterday] and traders bought back into equity markets as they took the view that goods would be freely moving across the English Channel again in the near-term.’
Demand for the single currency has also risen following US President Donald Trump’s attempt to veto America’s stimulus measures.
Consequently, demand for the Euro has increased as America faces growing uncertainty over its economy going into 2021.
In Eurozone economic news, today saw the release of the German Import Price Index for November, which beat forecasts and rose by 0.5%.
However, with the outlook for the Eurozone’s largest economy largely uncertain owing to new lockdown restrictions, this failed to boost the EUR/GBP exchange rate.
GBP/EUR Forecast: Could a Brexit Deal Compromise Boost Sterling This Week?
The Pound (GBP) will remain sensitive to Brexit developments this week, with any signs of further compromises in favour of a trade agreement being GBP-positive.
However, if talks between the UK and EU show signs of further strains, then we could see Sterling suffer.
Meanwhile, the Euro could begin to tumble following the Christmas period as the outlook for the Eurozone’s economy become more uncertain as Covid-19 cases rise throughout Europe.