Pound to Euro Exchange Rate Still on Track for Gains This Week as EU Summit Imminent
Days of up and down movement in the Pound Sterling to Euro (GBP/EUR) exchange rate look set to continue, as yesterday’s Brexit hopes were once again doused by fresh developments, which caused the pair to tumble overnight.
While not likely to be as significant as last week’s jump from 1.1233 to 1.1463, GBP/EUR is still on track to sustain solid gains this week due to hopes that a Brexit deal is still relatively close.
Yesterday afternoon, GBP/EUR touched on a 5-month-high of 1.1618, but has since shed yesterday’s gains, and trends near the level of 1.1542 at the time of writing on Thursday morning.
Investors have been buying the Euro (EUR) more on rival weakness this week. Overall, the Eurozone outlook remains heavily weighed by economic concerns.
Pound (GBP) Exchange Rates Tumble from Highs as DUP Rejects Current Draft of Brexit Plans
UK-EU Brexit negotiations have come into full force in recent sessions. There have been crunch attempts to hash out a last-minute Brexit deal in time for the EU Summit taking place from today through tomorrow.
Hopes had been rising that the UK government and EU negotiators were getting closer to reaching a deal. This has led to strong Pound (GBP) demand for most of the week so far.
However. the current draft of the deal has been rejected by Northern Ireland’s Democratic Unionist Party (DUP). The DUP is a key ally for the government, which lacks a majority in UK Parliament.
This left the Pound much weaker today amid fears that talks could collapse or any formed deal could quickly be blocked.
Euro (EUR) Exchange Rates Benefitting from Rival Weakness despite Lack of Support
Recent Eurozone data continues to paint a relatively bleak picture for the bloc’s economic outlook, and concerns persist that Germany’s economy fell into recession in Q3.
Yesterday’s Eurozone inflation rate even fell short of projections, likely giving the European Central Bank (ECB) more reason to maintain a dovish stance on Eurozone monetary policy.
A lack of domestic support for the Euro made it easier for GBP/EUR to sustain gains this week. Despite this, the pair has still seen solid losses from its best levels today.
This has been due to weakness in the Euro’s biggest currency rivals. Today’s Pound weakness of course, but also continued mixed movement in the Euro’s biggest rival, the US Dollar (USD).
Pound to Euro (GBP/EUR) Exchange Rate Could Plummet if Negotiations Fall Through
With most of the week’s notable UK and EU ecostats having already been published, the upcoming EU Summit and Brexit developments are likely to dominate Pound to Euro (GBP/EUR) exchange rate movement for the remainder of the week.
The EU Summit is set to begin today, and will last through tomorrow. It has been perceived as the last realistic chance the UK government has, of completing a Brexit deal by the 31st of October deadline.
As a result, if talks fail or the speculated deal is not seen as enough, the Pound could tumble before markets close for the week.
On the other hand though, if negotiators remain optimistic and the EU indicates that another summit could be held in the coming weeks to secure a last-minute Brexit deal, the Pound is likely to sustain its gains or climb even higher.
The Euro is likely to continue moving in reaction to Pound and US Dollar (USD) movements. Investors are unlikely to buy the Euro too much amid a lack of supportive Eurozone news lately.
As a result, the Pound to Euro (GBP/EUR) exchange rate is only likely to fall far in the coming sessions if Brexit talks go badly and the Pound plunges.
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