GBP has had a bad start to the trading week against all major currencies, with pound to euro exchange rates hitting a 2 ½ month low and the pound having also dropped at least 1% against all other major currencies at the time of writing.
It does feel that sentiment has turned in the favour of no deal Brexit and there were various reports this morning suggesting that UK Prime Minister Boris Johnson was ready to walk away from the trade talks and push on with no deal.
Whether or not this is political posturing and more of a plan to get the EU to back down and make concessions on the sticking points that remain is yet to be seen, but it does once again highlight just how fragile sterling exchange rates are at present and how just a little piece of news can have a large impact on the value of the pound.
What Could Influence GBP/EUR Rates Ahead?
The next few weeks will likely be key for sterling’s short to mid-term performance and sentiment seems to be on a knife edge, so if you have a large currency position involving wither buying or selling the pound it really is important to be ready to act swiftly should an opportunity present itself or the market takes a sharp downturn.
Later on today Boris Johnson is due to have a phone call with Ursula von de Leyen and expectations are that the two will agree that talks can continue until Wednesday but after that if no agreement has been made then this will be the final cut off point and at this stage preparations will be made for a no deal Brexit.
We have had a number of deadlines that have all been broken over the past few weeks, but realistically there are only 24 days before December 31st so for any deal to be ratified and pushed through there will need to be ample time to carry out the process and the clock is well and truly ticking already.
With all of this in mind it is expected that this week could be full of volatility and the spotlight for sterling exchange rate performance will be firmly placed on what happens between the UK and EU negotiating teams.
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