The pound to euro exchange rate was higher by 0.20% on Wednesday as the British pound continues to get a boost from hopeful traders. A Brexit deal still looks like a lost cause, but investors are clinging to any positive headlines.
Sterling had been under pressure early this week as fears of a second variation of the Coronavirus was said to be found in the U.K. This fear is now fading as more European countries worry that they may have imported it already.
The GBP to EUR rate was trading at 1.1000 as markets await some Christmas cheer on Brexit.
France Lifts Border Restrictions but With a Catch
The French government has lifted their Monday restrictions on UK truck drivers and travelers from entering the country. However, there is a catch as anyone looking to cross must produce a negative virus test for the virus taken within the past three days.
The week began with the UK in panic that a new strain of Coronavirus that could be more contagious hit the news as the country went into another lockdown. This has given way to fears that the virus will move into Europe and this is seeing the pound to recover against the euro.
Further lockdowns in Europe are joining the UK’s Christmas shutdown and this is dragging on the single currency. Ireland is expected to close its pubs and restaurants from the 24th as it moves to contain the spread of the virus. Ireland has extended a travel ban to the UK and 40 other countries also blocked travel in and out of the UK.
Despite this aggressive reaction, the U.S. Center for Disease Control has said there was “no evidence” that the latest strain of the virus was more contagious.
The markets will now head for a Christmas break, but Brexit risks will still exist and we are set to start 2021 with continued lockdowns. This could take the cheer out of the vaccine recovery play that analysts have been predicting for the year ahead.
Brexit Talks Still Stranded With ‘Serious Disagreements’
Brexit talks are still not seeing a breakthrough and Boris Johnson’s latest fishing concession has been rebuffed by the European Union. The U.K. was looking to take a 30% share in value of the EU catch in British waters, which was a substantial drop on last week’s 60% demands, but the EU still wants to have 75% of the catch.
The UK Housing Secretary Robert Jenrick told Sky News:
“There’s still the same serious areas of disagreement … we’re working through those issues, our negotiators will keep going. But at the moment there isn’t sufficient progress. It isn’t a deal that the prime minister feels he can sign us up to.”
The December 31st deadline is getting closer and the chances of a deal being agreed and ratified are disappearing. Even if they do pull off a Christmas miracle, traders and businesses have had little time to prepare as the New Year begins.