Pound Euro (GBP/EUR) Exchange Rate Extends Gains as End to Anglo-French Fishing Row in Sight
(Updated 16:30, 07/12/21) The Pound Euro (GBP/EUR) exchange rate has finished today’s European session on a high. Despite an earlier wobble, GBP/EUR is currently trading at around €1.1775, up just over 0.1% from this morning’s opening level.
The upside comes as markets remain optimistic over the Omicron Covid variant. Early data from South Africa – where the new strain was first identified – suggest that Omicron causes much milder symptoms than earlier variants. Only 8% of Covid patients in South Africa are in intensive care versus 23% during the Delta wave.
In addition, the Anglo-French fishing dispute looks like it may be resolved tomorrow.
Paris has threatened retaliatory action against London over what it sees as a breach of the Brexit agreement. Following Brexit, the UK agreed that fishers who had historically operated in British waters could continue to do so. However, many French fishers were not reissued licenses as they now own new boats.
Reports suggest that the UK will seek to resolve the issue tomorrow. London will issue new licenses under a ‘replacement boats’ scheme. GBP investors seem hopeful that this will ease tensions between the UK and France, lessening the likelihood of punitive measures from the EU.
Original article continues below:
Pound Euro (GBP/EUR) Exchange Rate Edges Up on Bullish Sentiment
The Pound Euro (GBP/EUR) exchange rate has ticked higher today as a risk-on market mood sees investors opt for Sterling over the Euro (EUR), which is seen as a safer investment.
Meanwhile, mixed data from the Eurozone has not been enough to prevent a downside in the single currency.
Pound (GBP) Firms in Cheery Trade
The Pound (GBP) has managed to inch higher against the Euro today as an upbeat market mood favours the perceived riskier Pound over the safe-haven single currency.
Markets continue to recover as fears over the Omicron Covid variant fade. Initial data seems to suggest that the new strain produces milder symptoms than previous variants, with Dr Anthony Fauci – the White House’s chief medical adviser – saying that early reports are ‘a bit encouraging’.
Since the new variant emerged, markets have been particularly sensitive to any comments about how it may impact the world. Therefore these positive updates have sparked an risk-on shift in market mood.
In addition, positive Chinese data last night has also increased investors’ appetite for risk. Growth in China’s imports and exports was unexpectedly strong last month, causing traders to feel more hopeful about the state of the world’s second-largest economy.
Euro (EUR) Struggles following Mixed Data
Meanwhile, the Euro has softened after some mixed data releases from the Eurozone.
Earlier this morning, Germany’s industrial production report for October smashed forecasts. Output jumped by 2.8%, well above expectations of a 0.8% rise. However, the upside was countered by the fact that industrial production still remains 6.5% lower than pre-pandemic levels.
Later in the morning, the Eurozone’s latest estimate for the year-on-year GDP growth rate for the third quarter of 2021 printed slightly higher than expected.
However, the growth rate came alongside Germany’s ZEW economic sentiment index, which was a little less rosy. The indicator fell from 31.7 to 29.9 this month. While this was significantly higher than predictions of 25.1, morale remains very low.
As a result, the Euro has edged lower in today’s trade. However, with the data not as bad as many investors may have feared, the downside seems limited so far.
Pound Euro Exchange Rate Forecast: Risk Appetite to Drive Movement?
With no more market-moving data out for either the Euro or the Pound today, risk appetite could continue to be a driving factor in GBP/EUR.
Turning to tomorrow’s session, the Pound Euro pair could be fairly quiet in the morning, with a speech from the European Central Bank (ECB) President Christine Lagarde the only item on the calendar likely to cause much movement.