Pound Euro (GBP/EUR) Exchange Rate Wavers amid Breakthrough in NI Protocol Negotiations

Pound Euro (GBP/EUR) Fluctuating as Trust Grows Between UK and NI

The Pound Euro (GBP/EUR) exchange rate is trading erratically this morning amid hopes that an amicable solution can be reached very soon. A breakthrough in negotiations could quell fears of a trade war between the UK and EU.

At time of writing, the GBP/EUR exchange rate is around €1.1646, relatively unchanged from this morning’s opening levels.

Pound (GBP) Quiet Despite Breakthrough in Brexit Agreement

Meanwhile, the Pound (GBP) failed to muster much support this morning in lieu of a lack of major data. Instead, Sterling is left exposed to domestic woes and mounting economic pressures. But providing some modest support to Sterling are hopes of a solution to the Northern Ireland protocol.

Simon Coveney, Irish Minister for Foreign Affairs and Defence said that trust is building between the two parties. If an amicable resolution can be met between both the UK and Northern Ireland, fears of a trade war will be quashed. Coveney added that a ‘landing zone on the protocol is possible in the next few weeks.’

The comments come a day after European Commission President Ursula von der Leyen was hopeful that a deal could be ‘within reach’. Von der Leyen added that not all Irish Sea border checks could be scrapped because of Brexit. Adding also that the EU’s single market must remain protected.

Euro (EUR) Muted Despite Edging Closer to Russian Oil Price Cap

Meanwhile, the Euro (EUR) struggled to find a clear direction despite Brexit fears allaying and the progress of a Russian oil price cap.

Designed to keep Putin’s war efforts muted, the European Union is edging closer to agreeing a $60 a barrel price cap. In the face of western sanctions, the cap is to prevent a potential loss of oil, which would exacerbate the energy crisis in Europe. Experts believe that putting a cap in place could see the war in Ukraine end faster. However, a failure to implement one would be a huge win for Russia.

Lending some modest support to the Euro were comments from ECB President Christine Lagarde. Reiterating her stance on tackling inflation, Lagarde was adamant that the central bank must work hard to bring inflation back down to target. Lagarde added:

‘What we central bankers have to do is deliver a monetary policy that anchors expectations. We need to signal to the public, to the observers, to the commentators, that in all scenarios, inflation will return to our medium-term target in a timely manner.’

Pound Euro Exchange Rate Forecast: ECB Speech to Inspire the Euro?

Looking ahead, the Pound Euro exchange rate could see modest movements for the rest of the day. Amid a lack of major data, the pairing could be exposed to market sentiment. A speech from ECB Vice President Luis de Guindos is set to take place this afternoon. Any further hints towards the central bank’s monetary policy going forward could boost the Euro.

Meanwhile, Sterling will head into the weekend vulnerable to the persistent domestic headwinds. Without any major data until next week’s session, the Pound could slip amid the tenacious economic pressures.

Danny Tingle

Contact Danny Tingle

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