Euro to Pound (EUR/GBP) Exchange Rate Plummets as Brexit Deal Hopes Boost Sterling
21 October 2020
EUR/GBP Exchange Rate Sinks as EU Provides Lifeline for Brexit Talks
The Euro to Pound (EUR/GBP) exchange rate plummeted by -1.2% today, with the pairing currently trading around £0.902.
Sterling soared against many of its peers today after Downing Street welcomed what it called ‘significant’ remarks from the European Union’s Chief Negotiator, Michel Barnier, who suggested a way of unlocking Brexit trade talks.
A spokesman for Number 10 said:
‘We note with interest that the EU’s chief negotiator, speaking to the European Parliament this morning, has commented in a significant way on the issues behind the current difficulties in our talks.’
As a result, the GBP/EUR exchange rate soared today on renewed hopes that the UK and the EU could begin to make progress towards a post-Brexit trade deal.
Meanwhile, UK economic data has revealed that the Public Sector Net Borrowing figure had soared by £35.667 billion in September.
However, Chancellor Rishi Sunak was relatively upbeat in his assessment of the data, saying that it could have been much worse had the Government not intervened to hold back the Covid-19 crisis.
Mr Sunak said:
‘I’ve been clear that our enduring priority is to protect as many jobs and businesses as possible through this pandemic, which is the fiscally responsible thing to do.
‘Over time and as the economy recovers, the government will take the necessary steps to ensure the long-term health of the public finances.’
Euro (EUR) Falls as Concerns Grow Over Eurozone Economy
The Euro (EUR) plummeted against Sterling today with single currency investors becoming increasingly concerned for the Eurozone’s economy.
The European Central Bank’s President, Christine Lagarde, warned that the bloc’s recovery remains uncertainty amid a second wave of the coronavirus.
‘The second wave of the epidemic in Europe, particularly in France, and the new restrictive measures that accompany it add to uncertainty and weigh on the recovery.
‘If the situation deteriorates, this will obviously darken our forecasts, which we will revise in December.’
Meanwhile, EUR investors are remaining cautious as Europe is wracked by rising Covid-19 infections and an uncertain economic climate.
Furthermore, safe-haven demand for the single currency has slipped since America seems more determined to secure a Covid-19 stimulus deal ahead of the November US presidential elections.
EUR/GBP Forecast: Could Sterling Rise on a Breakthrough in Brexit Talks?
Euro (EUR) investors will be awaiting tomorrow’s release of November’s German GfK Consumer Confidence Survey.
As a result, we could see the single currency suffer if Germany’s economy – the largest in the Eurozone – appears to be struggling amid fears of a second-wave of Covid-19.
Tomorrow will also see the Eurozone’s overall flash Consumer Confidence figure for October. Again, if this significantly deteriorates, the EUR/GBP exchange rate could fall further.
Brexit will continue to dominate EUR/GBP movement, however, with any signs of a breakthrough in Brexit talks being GBP-positive.