The Pound Euro (GBP EUR) exchange rate surged at the end of the European session yesterday as it emerged that the UK government would be willing to offer up to €50bn to meet its financial obligations to the EU.
Pound’s (GBP) Rockets on Hopes Brexit Bill Offer will lead to Progress in Negotiations
Sterling sentiment is soaring this morning on hopes that the UK’s offer to pay up €50bn in its ‘divorce’ bill with the EU will help to get Brexit negotiations moving again.
Despite both sides seeking to speed up talks over the last month negotiations continue to have stalled in recent weeks with the two sides in stalemate over a number of issues, the most contentious of which was reported to be the size of the UK’s financial obligations to the EU, or the so-called Brexit bill.
So the news that the UK government is willing to potentially offer up to €50bn has come as a major relief to investors, especially given that reports from Brussel suggest that officials are welcoming towards the latest offer.
With EU officials set to meet again new month at the latest EU summit to decide whether ‘sufficient progress’ has been made in Brexit negotiations to allow trade discussions to get underway, it is hoped that the larger financial offer will help talks move forward as a brisker pace.
Naeem Aslam as Think Markets said;
‘Picking up the Brexit bill has been the very thorny issue since day one and given that now the government has agreed to a respectable amount, the talks between the UK and the EU (which are set to resume next month) should be smoother.’
Euro (EUR) Bolstered By Uptick in Eurozone Economic Sentiment
The Euro was able recoup some of its losses as the morning went on however as the single currency was strengthened by yet another uptick in the Eurozone economic sentiment index as it climbed from 114.1 to 114.6 in November in line with expectations and reaching its highest levels since late 2000.
The latest jump continues to underline the recent strength of the Eurozone economy, which has been rapidly expanding over the last twelve months.
GBP EUR Forecast: Germany Inflation to Prompt Euro Rally?
Looking ahead the GBP EUR exchange rate could find itself relinquishing more of its recent gains later this afternoon with the release of Germany’s latest CPI figures as economists forecast that they will slow that inflation rose from 1.6% to 1.7% in November.
Meanwhile GBP investors are likely to remain focused on the tone of the EU’s official response to the UK’s €50bn bill offer, especially given there are still a number of other obstacles to overcome in negotiations.
Current Interbank Exchange Rates
At the time of writing the GBP EUR exchange rate was trending around 1.1309 and the EUR GBP exchange rate was trending around 0.8844.