The pound to euro rate rallied in early Monday trading, gaining more than a cent, after the week began with another extension to deadline talks. The GBPEUR was trading above the 1.1020 level again after Boris Johnson and Ursula Von Der Leyen agreed to, “go the extra mile”.
The news will dominate trading for the day ahead of the UK unemployment data on Tuesday.
Another Brexit Deadline Passes Without Any Obvious Progress
Sunday’s “cliff edge” Brexit deadline has passed after the two sides agreed to continue the talks early this week. The negotiating team are still locked on the same issues as the opportunities to present a deal to parliament and the EU27 nations continue to pass by before the year-end. Businesses have been pleading for time to see an agreement and prepare for the rule changes but it’s looking like the situation will continue to drag into year-end.
Many bank analysts had predicted that talks would be extended after seeing similar deadlines pass in recent years. Others had taken the opposite view as hedging costs were at levels similar to the post-referendum slump in sterling exchange rate.
The UK exchange rate could still come under pressure if the terms of a deal are watered down, or appear to give an advantage to their European trading partners.
UK Unemployment Figures Will Add Further Movement
Tomorrow will see the release of the latest UK unemployment figures with analysts expecting a loss of 250k jobs on top of last month’s -164k loss. The figures would also lead to a rise in the unemployment rate to 5.1% after the indicator has moved steadily higher from February’s 4% level.
British jobs are still being shed as the lockdowns continue into December but there is some hope for the High Street over Christmas as shoppers flocked to London’s Oxford Street and Regent Street over the weekend. However, this only brought government warnings of a move to a strict Tier 3 lockdown for the city.
In Europe, Germans have seen their own year-end plans scuppered after the German Chancellor and state governors increased lockdown measures until January 10th and this could also weigh on the euro in the week ahead.
“We are forced to act and we’re acting,” Chancellor Merkel told reporters, stating that the rules imposed during November had been unable to see a strong reduction in the number of new infections.
If you have an upcoming currency transfer and would like to learn more on GBP to EUR exchange rates, feel free to contact me directly using the form below.