The pound to euro interbank exchange rate has reached 1.1506 today, its strongest in 21 weeks, or since Wednesday 15th May. In part, this is because the EU’s Chief Brexit Negotiator, Michel Barnier, has told journalists today that a Brexit agreement this week is “difficult but possible.”
This follows reports from UK and EU sources that there’s “cautious optimism” that a Brexit agreement can be reached in the next few days.
However, London and Brussels will have to work quickly to reach a deal, either ahead of this Thursday 17th’s EU summit, or the current Brexit deadline of October 31st.
Sterling strengthens versus euro, as Barnier says Brexit deal “possible”
One reason why sterling has reached this 21-week high versus the euro today is because the EU’s Chief Brexit Negotiator, Mr. Barnier, has said that a Brexit deal this week is “possible”.
Speaking to journalists as Mr. Barnier arrived to brief EU ministers of the latest Brexit progress, said that: “reaching an agreement is still possible, obviously any agreement must work for everyone, the whole of the UK and the whole of the EU.”
Moreover, a previously-scheduled press conference with Mr. Barnier has been cancelled, signalled that negotiations are too intense to pause, and potentially boding well.
GBP to EUR rate might be affected, as UK and EU must work quickly
However, looking forward, the pound to euro interbank exchange rate might be affected, because if the UK and EU are to reach a Brexit deal this week, they must negotiate fast.
This is because the EU’s summit is this Thursday 17th, and Brussels has pledged not to further discuss Brexit with UK Prime Minister (PM) Boris Johnson there.
If the UK and EU don’t reach a Brexit deal in the next two days, then the BBC reports that Brussels may be prepared to hold an emergency summit next week, if enough progress has been made. Otherwise, Mr. Johnson may be obliged to request another Article 50 extension, beyond October 31st.
Sterling vs euro might be influenced, as UK unemployment rises
Elsewhere, the pound’s value versus the euro could be affected, because UK unemployment rose by +0.1% to 3.9% in the three months to August, said ILO today. Samuel Tombs, chief UK economist for Pantheon Macroeconomics, says that this reflects “heightened Brexit and domestic political uncertainties.”
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