The pound to euro exchange rate was 0.45% lower on Monday after new drama over the coronavirus saw London go into full lockdown and European countries banning U.K. travel. 00 level. A Brexit deal is still nowhere to be seen after missing a European Parliament deadline, but talks are still in progress.
The economic calendar is light for the Eurozone and U.K. today so the news will dominate.
France and Germany Join U.K. Travel Bans
France and Germany have joined a list of countries placing a travel ban on the U.K. after a new strain of the coronavirus was found in the country. Boris Johnson cancelled the agreed Christmas rules and the UK is now moving into strict lockdown measures. The new UK variant of the virus was claimed to be 70% more contagious, which saw ministers taking action, while travel restrictions were imposed by European neighbours, including Ireland.
The GBP to EUR rate may now hinge on whether this new form of virus continues to spread, or whether it begins to spread into Europe. Sterling is seeing weakness as traders begin to factor in the economic effects of another set of lockdowns.
The FTSE 100 stock index dropped by 1.8% on Monday’s open as traders reacted to the latest lockdown news. Companies hit hardest include BA owner International Airlines Group, which was off 16% and Rolls-Royce. The banks were also seeing losses despite the pending approval of a U.S. stimulus package.
Brexit Talks Are Still Stuck in Limbo
Talks regarding Britain’s exit from the European Union are set to continue today after missing the EU Parliament’s Sunday evening deadline. The Parliament still needs to ratify any agreement and were looking to hold an emergency meeting if a deal had been found. The UK Parliament would also have to be recalled from Christmas break to vote for any deal.
The talks are still stuck on the same issues of fishing and future regulations, but these have been sticky issues for the last two months and it’s looking unlikely that a deal will not happen.
Scotland’s first minister, Nicola Sturgeon, has now asked the Prime Minister to ask for a Brexit deal extension. Boris Johnson will today hold an emergency Cobra meeting to avert UK food shortages after France banned all freight from Britain.
The pound to euro exchange rate was trading below 1.0900 in early-Monday trading as sellers begin to emerge on lockdown fears. Get in touch to discuss potential movement for the pound ahead as these factors play out.