GBP/EUR Exchange Rate Strikes Six-Week Low as Brexit Fears Mount
The Pound Euro (GBP/EUR) exchange rate is currently trading at a six-week low this morning as Sterling sentiment continued to be battered by fears the UK is headed towards a no-deal Brexit.
At the time of writing the GBP/EUR exchange rate is trading at €1.099, just off its worst levels struck at the start of the European session.
Pound (GBP) Sell-Off Gathers Pace as Brexit Tensions Rise
The Pound (GBP) struck a six-week low against the Euro (EUR) this morning as heightened no-deal Brexit fears drives Sterling into a corner.
Boris Johnson has been reminding markets of his Brexiteer roots this week, with the PM seeking to strike a more hard line stance on Brexit as trade talks with the EU enter the final straight.
Johnson now insists that 15 October is a hard deadline for a deal to be found, while also announcing that the government is planning to override part of the EU withdrawal deal.
This has seen the perceived risks of a no-deal Brexit surge notably over the past week, exerting significant pressure on GBP exchange rates.
John Hardy, Head of Forex strategy at Saxo Bank comments:
‘Boris Johnson’s aggressive Brexit stance is making waves, with sterling selling off steeply as the market begins to price in the risk that the U.K. is willing to end the Brexit transition period with No Deal rather than submit to EU terms on fisheries and especially state aid (U.K. internal investments favouring various industries).’
Euro (EUR) Set for Losses as ECB to Question Strength of Single Currency?
The Euro (EUR), is currently stuck in a narrow range this morning as markets brace for the European Central Bank’s (ECB) latest rate decision.
While no policy changes are expected from the ECB this month, the bank is expected to more clearly highlight its concerns over the current strength of EUR exchange rates.
The Euro has appreciated roughly 10% since March, putting downward pressure on inflation and likely hampering the Eurozone’s economic recovery.
Analysts at HSBC suggest:
‘In the current environment, where EUR strength is much less justified by the economic backdrop than it was in 2017-18, we believe the ECB’s rhetoric on FX is likely to ramp up with further easing likely.
‘As and when this happens, further strength in the EUR should be curtailed.’
The ECB will deliver its rate decision at 11:45 GMT on Thursday.
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