EUR/GBP Exchange Rate Sinks as Brexit Hopes Boost Pound
The Euro to Pound (GBP/EUR) exchange rate fell by -0.4% today as post-Brexit trade deal hopes have buoyed Sterling. The pairing is currently fluctuating around £0.899.
Following the US election, in which Democrat Joe Biden has effectively secured the position as US President after January, GBP investors have become more confident in the likelihood of a UK-EU Brexit trade agreement.
Simon Coveney, the Ireland’s Minister for Foreign Affairs, commented:
‘I think this will be a cause for ’pause for thought’ in No 10 to ensure that the Irish issues are prioritised as we try to close out this phase of the Brexit negotiations.’
This follows the US Democrat’s criticism of the UK’s handling of Ireland, which, they believe, threatens the Good Friday Agreement.
Consequently, Sterling has edged higher that US pressures could swing Brexit in favour of a UK-EU trade agreement.
However, with the UK economy expected to suffer pre-Christmas slump, GBP investors are remaining cautious as the coronavirus wracks the economy.
Euro (EUR) Sinks as Risk-On Markets Weigh on Safe-Haven Single Currency
The Euro (EUR) struggled against many of its peers today as safe-haven demand for the single currency has slipped on hopes of a Covid-19 vaccine.
Biotech companies Pfizer and BioNTech have revealed that their coronavirus vaccine is 90% effective.
Consequently, investors have celebrated the news, flocking to riskier assets as the global economic outlook improves as a result.
In Eurozone economic news, today saw Germany’s exports figure rise by 2.3%, providing a boost of optimism for the bloc’s largest economy.
Carsten Brzseski, the Global Head of Macro at ING, commented:
‘Still, the outlook for German exporters brightened last Saturday. If there is one single sector of the German economy in which the preliminary outcome of the US elections led to popping the corks, it is the export sector. With US president-elect Biden, the threat of US tariffs on European (read German) automotives should disappear.’
Meanwhile, with Germany and France – the Eurozone’s two largest economies – are under lockdown, EUR traders are remaining concerned that this could have severe consequences soon.
EUR/GBP Forecast: ZEW Surveys and Brexit News in Focus
Pound (GBP) traders will be eyeing tomorrow’s release of September’s UK Unemployment Rate report.
If UK joblessness continues to rise, then the GBP/EUR exchange rate will suffer.
Additionally, GBP investors will be awaiting further Brexit updates.
As a result, we could see Sterling rise if it looks increasingly likely that Downing Street will concede on a post-Brexit trade agreement.
Euro (EUR) investors will be awaiting tomorrow’s release of November’s Eurozone ZEW Survey of Economic Sentiment. If this increases, then the Euro (EUR) could claw back some of its losses.
The EUR/GBP exchange rate could remain under pressure this week if risk-sentiment continues to improve on hopes of a Covid-19 vaccine.