Reports of UK-EU Customs Union Deal Push Pound Sterling Higher
The Pound (GBP) has risen against the Euro (EUR) today, thanks to reports that a UK-wide customs union deal with the EU could be agreed on.
A story in the Sunday Times revealed the ‘secret deal’, which has supposedly been secured by Prime Minister Theresa May.
Although Downing Street officials have denied the veracity of the Times’ report, the Pound has still traded higher due to the implications of a stable Brexit deal.
Signs of UK-EU Financial Services Deal Boost GBP/EUR Exchange Rate
Another factor that has pushed the Pound (GBP) up against the Euro (EUR) today has been the news that UK financial service providers could access the EU after Brexit.
There were rumours of a deal being agreed last week and since then, Financial Services Minister John Glen has said:
‘I am extremely confident we will reach an imminent deal.
‘There is common ground. That is why we are increasingly positive on the expectation of reaching a deal.’
As the deadline for concluding Brexit talks gets closer, Pound traders have latched onto any news that points towards a potential agreement.
Financial services have been a key worry among GBP traders in the past, given that if Brexit goes badly they may decide to relocate outside the UK en masse.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Losses Caused by Investor Confidence Slide
The Euro (EUR) has been weakened by this morning’s Sentix investor confidence reading, which has revealed a sharp dropoff from 11.4 points to 8.8.
This is the lowest level of optimism seen since November 2016 and is blamed on a number of detrimental influences.
Summing up the current problems facing Eurozone investors, Sentix Managing Director Manfred Huebner said:
‘The reasons for this development are manifold. There are external factors such as the US President’s trade policies as well as European issues.
‘The discussion about the future of the car industry in Germany, the weakness of the banking sector and the budget issue in Italy come to mind.’
Pound Sterling to Euro Exchange Rate Forecast: Will GBP/EUR Rise on Eurozone PMI Upset?
The Pound (GBP) could extend its current lead against the Euro (EUR) on Tuesday morning, when a number of Eurozone PMI readings are due out.
The services sector and overall composite PMI readings are both expected to show a slower pace of economic activity, which could further weaken the Euro.
Making the situation worse, the German readings are also expected to print poorly and given the size of the German economy, this could have an added negative effect.
Beyond this, Wednesday’s Eurozone retail sales readings could further unsettle Euro traders if they reveal a forecast-matching annual slowdown from 1.8% to 0.7%.