GBP/EUR Exchange Rate Surge on Fresh Brexit Optimism
The Pound to Euro (GBP/EUR) exchange rate opens today’s session on solid footing as GBP investors are cheered by suggestions from the EU that a Brexit trade deal is ‘within reach’.
At the time of writing the GBP/EUR exchange rate is trading at €1.1006, up around 0.5% from this morning’s opening rate.
Brexit Deal Hopes to Unleashes the Pound’s (GBP) Upside Potential
The Pound (GBP) has mounted a convincing comeback this morning, riding high on a fresh wave of hopes for a post-Brexit trade deal between the UK and EU.
This revived optimism comes on the back of comments from the EU’s Chief Negotiator Michel Barnier.
Speaking in the European Parliament in Brussels this morning, Barnier suggested a trade deal is ‘within reach’ and offered an olive branch to Boris Johnson by emphasizing the importance of UK sovereignty.
Barnier said:
‘What’s at stake in these negotiations is not the sovereignty of one side or the other, the EU’s position is fully compatible with the respect of British sovereignty, a legitimate concern of Boris Johnson’s government.’
On top of this Barnier stated that the EU is ‘ready to discuss all subjects on basis of legal text’.
This was seen further helping to entice Johnson back to the negotiation table after the PM previously announced that talks were ‘over’ unless the EU is prepared to discuss the detailed legal text of a partnership.
Euro (EUR) Remains Vulnerable to Coronavirus Concerns
At the same time, while the Euro (EUR) remains fairly well supported this morning, largely thanks to a broad sell-off of the US Dollar (USD).
However Europe’s coronavirus resurgence leaves the single currency highly exposed to downside risks, particularly given the potential consequences for the Eurozone’s already fragile economic recovery.
European Central Bank (ECB) President Christine Lagarde, highlighted these concerns in an interview in which she labelled the sudden coronavirus resurgence as a ‘clear risk’ to the bloc’s economic outlook.
Lagarde said:
‘Most scientists in the Eurozone were expecting the resurgence of the epidemic in November or December, with the cold.
‘It’s come earlier, and from that point of view that has surprised. It’s not a good omen.’
Despite her comments, most analysts forecast the ECB is likely to leave its monetary policy untouched with its government council meets next week.
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