The Euro Pound (EUR GBP) exchange rate is strengthening this morning as investors await a vote by EU leaders on whether to move Brexit negotiations onto the next stage of talks.
Pound (GBP) Dips Ahead of Key Brexit Vote
The Pound is on the back foot this morning ahead of a vote by EU leaders on whether enough progress has been made in Brexit negotiations to allow the second stage of talks to begin.
EU leaders are expected to allow talks to move on to discussing the future relationship between the UK and EU after Theresa May was able to finalise the UK’s exit agreement last week.
However despite the relief that talks will finally be able to progress, investors are likely to remain wary as analysts expect the second stage of talks to be even rockier than the first.
Also likely to sour Sterling sentiment is that the EU is likely to delay the start of trade talks until spring next year, disappointing both the UK government and investors who were hopeful that trade discussion could has got underway by the end of 2017.
Joshua Mahony, market analyst at IG, said;
‘Despite the desire to kick-off trade negotiations in December, it is clear that those in the EU see March as the likeliest month to commence talks. With timelines already tight, the slower progression will heap further pressure on negotiations as they seek to obtain a transitional deal ahead of the March 2019 deadline.’
At the same time the dip in the Pound today has helped to offset any losses in the Euro following disappointing trade balance figures from the Eurozone, as the bloc’s trade surplus narrowed from €26.2bn to €18.9bn in October.
EUR GBP Forecast: CBI Figures to Weigh on Sterling Next Week?
While movement in the EUR GBP exchange rate is likely to be driven by Brexit today looking ahead to next week the Pound may tumble at the start of the session as the CBI publishes the UK’s latest industrial trends orders index, with economists expecting that it will have slumped from 17 to 3 in December.
Meanwhile the Euro may be subdued on Monday as November’s final CPI figures from the Eurozone are expected to confirm that core inflation held at just 0.9%, well below the European Central Bank’s (ECB) target rate of 2%.
Current Interbank Exchange Rates
At the time of writing the EUR GBP exchange rate was trending around 0.8803 and the GBP EUR exchange rate was trending around 1.1362.