The pound has begun to tread lower against the euro today and also during yesterday afternoon, as the message from the UK MP’s is that the deadline for Brexit remains intact.
No News of Brexit Extension Causes GBP Weakness
Some had hoped that there would be a delay to Brexit, or at least an extended deadline date for negotiations and for the deal to be in place owing to the pause in business globally due to the coronavirus. These hopes have been dashed recently though after Michael Gove and UK Prime Minister Boris Johnson have outlined their plans to stick to the original date. The pound to euro exchange rate has been rangebound recently, mostly trading between 1.14 to 1.15 with 1.15 acting as a resistance level. Both yesterday and today the pair have struggled to breach 1.15 and at the time of writing GBP/EUR is trading towards 1.14, most likely to due to the comments from UK leaders.
There have only been two meetings between trade negotiations since the UK left the EU and entered into the transitional phase of the Brexit. Both sides have outlined plans for progress by June so we could see the GBP/EUR pair influenced by Brexit talks especially around this time. Comments from Michel Barnier, the head of negotiations for the EU demonstrated frustration this month which resulted in a sell-off of the Pound so this is another matter for those of our readers with a GBP/EUR exchange to make to be weary of.
UK Economy Continues to Be a Cause for Concern
Concerns surrounding the UK economy remain, both because of the lockdown period and also due to Brexit talks stalling due to negotiators being unable to travel. Sterling had been climbing alongside other risk-on currencies due to lockdown rules being lifted to an extent in some European nations. After hitting a low of 1.05 just last month the pound has staged a significant recovery but the same risks remain so there could be the chance for a reversal if concerns regarding the UK economy persist.
Tomorrow could be busy for the euro as there are a number of date releases out in the morning covering employment levels and inflation, along with an interest rate decision and statement in the afternoon. Feel free to get in touch if you would like some further information on this matter.
If you have an upcoming currency transfer and would like to learn more, you can contact myself directly, Joseph Wright, using the form below.