The pound had a strong day yesterday against the euro with its “biggest one-day advance” on the common currency in a few months. Currently, there is a positive risk sentiment across investors which will only be improved once successful compromises and negotiations are made in the latest round of Brexit talks. Today, the pound is currently trading at a rate of 1.1230 against the euro according to Bloomberg at the time of writing.
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Pound to euro exchange rate: GBP remains ‘choppy’ as Brexit talks loom
This is a massive improvement on yesterday’s rate which saw it at 1.1122.
Sterling has now managed to claw its way back against the euro, even clearing that 1.12 handle barrier.
Michael Brown, Currency Expert at Caxton FX, spoke to Express.co.uk to provide exclusive insight into the current exchange rate.
He said: “Sterling put in a strong performance against the common currency on Monday, rising just shy of one percent and chalking up its biggest one-day advance in a couple of months, as the pound continues to benefit from the positive risk mood sweeping across asset classes.
“Today, with the data calendar barren, attention will centre on the latest round of post-Brexit trade talks, as the clock ticks down to the end of June deadline for extending the transition period.”
Trade negotiators from the UK and the EU will meet for a forth round of post-Brexit negotiations today.
However, despite the positive outlook this could have on sterling, Brussels and Britain are not expected to come to an agreement on how to proceed.
It is not expected that Britain will ask the EU for an extension to the post-Brexit transition period.
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But if a trade deal is not put in place, this could have a devastating impact on UK businesses which are already suffering due to the coronavirus pandemic.
The UK is expecting to have left the EU customs union on December 31, 2020.
George Vessey, a Currency Strategist at Western Union said that “all eyes” remain on Brexit trade talks ahead of the June 30 deadline.
He said: “All eyes are on the final round of Brexit trade negotiations between the UK and EU this week ahead of the June 30 deadline to agree an extension to the transition period.
“If no extension is requested and talks continue to lack progress, a no-trade deal Brexit becomes more likely and the markets may start to price in this scenario, which would weigh heavily on the pound.
“UK PM Boris Johnson is expected to attend the talks himself to try and break the current deadlock as the PM has shown no interest in an extension, sticking to his timeline to exit the EU and its rules by 2021.
“With both sides digging their heels in about the usual contentious issues – fisheries, a level playing field and the future role of the European Court of Justice – it seems unlikely much progress will be made this week.”
But he added that if Brexit negotiations are successful and compromises are made than sterling could rise.
“However, if compromises are made and hopes of a deal do rise, then expect sterling to climb.
“GBP/USD is flirting with the $1.24 handle this morning, propped up largely by USD weakness.
“There is an argument that the pair has broken out of a sideways trend channel with further upside on the cards.
“However, Brexit-related uncertainty poses a big threat to sterling this week.”
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