The Pound Euro (GBP EUR) exchange rate continued to punch higher this morning on hopes that the UK is finally making progress in Brexit negotiations.
Sterling’s (GBP) Jumps on Brexit Bill Offer and Irish Border Discussions
Sterling sentiment continues to soar this morning as investors are increasingly optimistic about the chances of the EU allowing trade discussions to begin next month.
This is on the back of hopes that the UK has finally reached an agreement with the EU over the size of its Brexit bill after the UK government offered to pay up to €50bn.
Further bolstering confidence in the Pound today are reports that the UK government is close to a breakthrough over the Irish border.
The Times writes;
‘British officials have come up with wording, as sought by the Irish government, on the future of the border following Britain’s departure from the customs union.’
It is reported that the proposal include a guarantee from the British government to ‘avoid regulatory divergence’ with Northern Ireland.
Although given DUP leader Arlene Foster’s recent comments that her party would reject any proposals that caused Northern Ireland to retain parts of the EU customs union it may be too early for celebrations.
Euro (EUR) Weakens as German Retail Sales Plummet
Meanwhile the Euro is struggling to advance this morning on the back of some lacklustre data from the Eurozone.
The most notable of which was Germany’s latest retail figures which revealed that retail sales growth plummeted from 0.5% to -1.2% in October, falling well below expectations of a more modest decline to 0.3% and falling to their lowest levels in 2017.
The appeal of the single currency was further dented by the release of the Eurozone’s latest CPI figures later in the morning as inflation only rose from to 1.5% in November, falling below expectations it would reach 1.6%.
GBP EUR Forecast: UK Manufacturing Activity to Rise?
Looking ahead the GBP EUR exchange rate may continue to press higher on Friday with the release of the UK’s latest Manufacturing PMI as economists forecast that the index will have climbed from 56.3 to 56.5 in November.
However Sterling may struggle to advance in the face of the Germany’s own manufacturing PMI as it expected to confirm that factory activity leapt to a new six-year high this month.
Current Interbank Exchange Rates
At the time of writing the GBP EUR exchange rate was trending around 1.1383 and the EUR GBP exchange rate was trending around 0.8785.
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