GBP/EUR Exchange Rate Gains on Vaccine Approval ahead of Brexit Vote

The Pound to Euro (GBP/EUR) exchange rate is making small gains this morning as the year comes to a close.

At the time of writing the GBP/EUR exchange rate is trading at around €1.1070, up half a cent from €1.1018 which opened today’s session.

Pound (GBP) Gains as Brexit Deal Reaches Parliament

The Pound (GBP) gained this morning as Parliament returned to vote on the EU (Future Relationship) Bill today.

A Commons debate started at around 9.30am this morning, with a vote expected in the early afternoon, where the deal is expected to pass.

Furthermore, the EU’s top officials have formally signed the post-Brexit trade deal with the UK.

European Commission President Ursula von der Leyen and European Council President Charles Michel put pen to paper this morning in Brussels.

Sterling investors were also boosted after UK regulators approved the use of the AstraZeneca/Oxford coronavirus vaccine this morning. This was seen as another factor that drove gains Sterling’s gains as the UK government has ordered enough vaccines for most of the population which has increased hopes of a faster economic recovery.

However, the Pound has still come under pressure as a national lockdown appears to be imminent, as coronavirus cases hit their biggest daily increase during the pandemic yesterday, with 53,135 cases reported.

Euro (EUR) Weakened as Coronavirus Dominates

The Euro (EUR) is struggling this morning, as coronavirus continues to dominate the Eurozone’s biggest economies.

Germany recorded a total of 1,129 deaths from coronavirus within the last 24 hours, reported the Robert Koch Institute (RKI) for infectious diseases on Wednesday.

It is the first time that more than 1,000 daily deaths from Covid-19 have been reported in the country.

However, the Euro continues to capitalise on the US Dollars struggles as the safe-haven currency faces continued pressure.

Yesterday Senate Majority Leader Mitch McConnell blocked Senate Minority Leader Chuck Schumer’s attempt to unanimously pass a bill to increase direct payments in the year-end coronavirus relief package to $2,000.

The blocking of the bill is increased risk appetite that is keeping the US Dollar weak – investors are still optimistic over the US stimulus.

GBP/EUR Exchange Rate Forecast: Threat of UK Lockdown to Weigh on Sterling in 2021?

Looking ahead, Pound (GBP) investors will be watching both the Brexit trade deal being debated in Parliament and an expected press conference this evening on the coronavirus pandemic, with much of the UK bracing to go into Tier Four which could weigh on the Sterling.

Meanwhile, the Euro could also struggle in the coming days as ongoing reports that the new, more infectious strain of the coronavirus has been detected throughout Europe, however the Euro will hope to further gain against the US Dollar (USD).

Georgina Clissold

Contact Georgina Clissold