GBP/EUR Exchange Rate Rangebound as Brexit Debates Go ‘Backwards More than Forwards’
The Pound to Euro (GBP/EUR) exchange rate held steady this morning, with the pairing currently trading around €1.109.
Sterling struggled to gain against the Euro (EUR) today after the European Union (EU) warned that a Brexit deal was ‘unlikely’. Michel Barnier, the EU’s Chief Negotiator, also said last week that he was ‘disappointed’ with the UK’s lack of serious commitment to securing a post-Brexit trade deal.
Michel Barnier, commenting last week, said:
‘Too often this week it felt as if we were going backwards more than forwards. Given the short time left, what I said in London in July remains true, today at this stage, an agreement between the UK and EU seems unlikely.’
As a result, Pound (GBP) investors have remained cautious during today’s session as there are still no signs of progression between the UK and EU.
Meanwhile, UK economic developments have remained in focus today, with the travel agents Abta saying that the Covid-19 crisis could claim 18^ of the UK travel sector’s jobs.
Mark Tanzer, Abta’s chief executive, said:
‘Sadly, businesses continue to be adversely affected and jobs are being lost at an alarming rate.’
‘Coming towards the end of the traditional period for peak booking, we have hit a critical point as existing government measures to support businesses begin to taper off, the consequence of which, according to this survey of Abta members will be ruinous for more people’s livelihoods.’
Euro (EUR) Steady as Eurozone’s Rebound Loses Momentum in August
The Euro (EUR) also held steady this morning following Friday’s release of the Eurozone’s PMI releases. The Eurozone’s flash PMI composite figure for August fell below forecasts from 54.9 to 51.6.
Andrew Harker, the Economics Director at IHS Markit, commented on the data:
‘The eurozone’s rebound lost momentum in August, highlighting the inherent demand weakness caused by the COVID-19 pandemic. The recovery was undermined by signs of rising virus cases in various parts of the euro area, with renewed restrictions impacting the service sector in particular. Manufacturers continued to post marked increases in output and new orders.’
EUR has also suffered from a sell-off of safe-haven assets today after US President Donald Trump announced blood plasma treatments in the battle against Covid-19. As a result, global markets have become more confident that the coronavirus can be treated.
GBP/EUR Outlook: Could a Strong German GDP Figure Buoy the Euro?
Euro (EUR) investors will be looking ahead to tomorrow’s release of the final German GDP figures for the second quarter. Any signs of a rebound in the Eurozone’s largest economy would prove EUR-positive.
Pound (GBP) traders will be awaiting tomorrow’s release of the UK CBI Distribute Trades Survey for August. Any improvement would boost the GBP/EUR exchange rate.
Meanwhile, UK markets will be keeping a close eye on UK-EU Brexit developments. If both show signs of coming to a consensus on a post-Brexit trade deal, then we could see the GBP/EUR exchange rate rise.
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