Pound Euro (GBP/EUR) Exchange Rate Continues to Fall amid Rancorous Anglo-French Rows
(Updated 16:00, 26/11/21) The Pound Euro (GBP/EUR) exchange rate has extended its downside today, hitting a fresh ten-day low, as Anglo-French relations remain fraught.
French fishers launched ‘symbolic’ protests at three French ports and the Channel tunnel as the dispute over fishing licenses continues.
France has accused the UK of not abiding by the Brexit agreement by failing to provide French fishing crews with licenses to fish in UK waters. The row has raged on for months, and today’s action was intended as ‘a warning shot’, said Olivier Lepretre, the president of Calais’s regional fishing committee.
French vessels did not restrict access to ports this time, but Lepretre warned that if the UK government does not act then fishers will ‘show more teeth’. He said:
‘The British have access to the European market, while we do not have access to British waters. This is not normal, the British government must respect the agreement.’
Also today, France withdrew an invitation to UK Home Secretary Priti Patel to attend a meeting about the Channel boat crisis after Boris Johnson tweeted an open letter to French President Emmanuel Macron.
The letter contained a five-point plan on how the UK and France could work together to deal with the crisis, after 31 people died trying to cross the Channel in an inflatable dinghy.
However, the French government said that posting the letter on Twitter was ‘wholly inappropriate’ and called Johnson’s suggestion that France should take back migrants who cross the Channel a ‘disappointment’.
The UK’s increasingly rocky relationship with the EU has weighed on the Pound (GBP) all week, and these latest spats have added to the pressure on GBP/EUR today.
Original article continues below:
Pound Euro (GBP/EUR) Exchange Rate Slumps on Covid Concerns
The Pound Euro (GBP/EUR) exchange rate fell sharply this morning as news of a highly mutated Covid variant rattles markets. As a result, the Euro (EUR) – seen as the safer currency of the two – has climbed against the Pound (GBP).
The single currency’s gains may be capped, however, as the European mainland faces rising coronavirus cases and new lockdown restrictions.
Pound (GBP) Slips as New Covid Variant Rattles Markets
The Pound has tumbled against the Euro this morning as fears over a new Covid variant see investors shun the riskier Sterling in favour of the safe-haven Euro.
A worrying new Covid variant has been identified in South Africa, triggering a risk-averse mood among investors globally. Scientists say the new variant has an ‘extremely high number’ of mutations, which could make it more transmissible and help it evade the body’s immune response.
The mutations could also mean that the current vaccines do not protect against the new strain.
While we currently know very little about the variant, markets and nations are taking no chances. Stocks have slumped, while many countries have introduced new travel restrictions.
As the riskier currency of the pair, the Pound has fallen against the Euro in response. However, it seems to have bounced off today’s ten-day low. This may be a minor correction as the single currency was overbought.
Euro (EUR) Thrives amid Risk-Off Mood and USD Weakness
Meanwhile, the Euro has surged this morning, as investors flock to the safe-haven currency.
With markets rattled by the new Covid variant, traders are selling off riskier assets, such as emerging-market currencies, and opting for safer investments, such as the Euro.
The single currency also seems to be supported by a weakness in the US Dollar (USD) due to the negative correlation between EUR and USD. US Treasury yields have fallen sharply over the past two days and US trading conditions have been thin due to yesterday’s federal holiday, which may have given the Euro space to climb this morning.
However, the sudden rally in the Euro does seem to have resulted in the currency being overbought. EUR rates rose sharply at the open of the European forex session, but have since lost some of their gains.
The Euro’s upside may be capped by Europe’s own worrying coronavirus situation. Cases have been rising rapidly in many European countries recently, leading to new lockdown restrictions in a handful of Eurozone nations, including Austria, the Netherlands, Belgium, and France.
As such, the single currency may find that today’s gains are capped.
Pound Euro Exchange Rate Forecast: Covid Variant in the Spotlight
We could see more sharp movement in the Pound Euro pair today as global markets react to the news of the latest variant. Any new developments about the spread or strength of the newly identified coronavirus strain could impact GBP/EUR.
Meanwhile, both the Pound and the Euro could face headwinds as the day goes on. With Covid cases rising across continental Europe, any news that more countries are introducing restrictions could dent EUR. As for the Pound, negative Brexit headlines could put further pressure on GBP exchange rates.