Pound drops against the euro in the exchange rate
The pound “gained ground” against the euro yesterday, despite the ongoing Brexit negotiations giving way to little sure sign of a deal being struck. Though UK and EU officials are continuing to battle it out in extended trade talks, with fisheries remaining a hot topic, the transition period deadline is rapidly approaching.
Prime Minister Boris Johnson has already warned Britons to “get ready” for an “Australian-style deal” suggesting a no-deal scenario could be likely.
Despite this, the pound has bounced around in recent days.
Yesterday, there was a sizeable gap between the pound and euro.
The pound is currently trading at a rate of 1.0979 against the euro according to Bloomberg at the time of writing.
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Michael Brown, currency expert at Caxton FX has warned “Brexit can-kicking” will ultimately determine the exchange rate in the coming days.
“Sterling gained ground against the euro yesterday, though almost the entirety of the advance came in the form of a gap higher at the Asian market open, with the pair treading water for most of the European day,” he told Express.co.uk.
“The bounce came after another round of Brexit can-kicking, and as negotiations between the UK and EU continue.
“Said negotiations will remain in focus today, with this morning’s labour market data of little importance for the market.”
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Though the UK’s transition period is due to come to an end on December 31, officials may extend part of the process in order to ratify a deal.
“The EU and UK agreed at the weekend to continue talking beyond the original deadline set, leading to speculation that a deal could be struck as late as December 31 given both sides opted to avoid committing to a new deadline,” explained Steven Colangelo, an expert from Western Union Business Solutions.
“On the matter of fisheries, there’s an idea that the UK might compensate EU fishermen in order to gain its objectives, while the talks around the main sticking point of the level playing field appear to be heading in the right direction.
“Should a deal be agreed upon the UK Government would only need 24 hours to ratify it, meaning December 30 would be the last day for an agreement to be reached by the negotiators.
“However, the European Parliament meets on December 28, if a deal was struck later than that they would ‘find a way’ for MEPs to ratify it in principle before member states’ parliaments voted to give retrospective approval.”
Despite the uncertainty ahead, money saving expert Martin Lewis has said rushing to swap travel money now might not necessarily be beneficial.
Speaking on ITV’s This Morning, Martin said: “If you’re trying to play the markets, the markets factor in what they know so that price is already in.
“It’s likely if we have a no-deal Brexit, the markets don’t like that and the pound will get weaker.
“That will be good for you if cashing your euros in so you’d want to wait.
“If we have a deal, the pound will get stronger which will be bad for you.
“I don’t know which one of those is going to happen.”
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