The GBP/EUR exchange rate extended its recent rally into its fifth consecutive session this week as fresh hopes of a Brexit deal continued to underpin the Pound.
Pound Flying High on Brexit Optimism
The Pound roared higher again this week, accelerating on the back of renewed hopes that the UK and EU will reach a deal on Brexit.
However Sterling initially struggled to off the starting blocks following a meeting between Boris Johnson and European Commission President Jean-Claude Juncker, after Juncker appeared to cast doubts on UK government’s commitment to reaching a Brexit deal.
The upswing in the GBP/EUR exchange rate was mainly focused in the latter half of the week, after an apparent 180 by Juncker, who told Sky News that ‘we can have a deal’ on Brexit by the deadline on 31 October.
Meanwhile the Euro also hit a few hurdles out of the gate this week, with markets wary of the single currency following speculation a US-EU trade dispute may be looming.
The Euro’s position as the most traded currency partner with the US Dollar also didn’t do the single currency any favours this week.
This resulted in EUR exchange rates weakening after USD jumped on the back of the Federal Reserve’s latest policy decision.
Could More Brexit Optimism Propel Sterling Even Higher?
Looking ahead to next week, UK political and Brexit developments may continue to act as the main catalyst of movement in the GBP/EUR exchange rate.
This could see Sterling extend its gains into another week if Brexit headlines remain broadly positive.
Also in focus will be the UK Supreme Court’s ruling on whether Boris Johnson’s proroguing of government was unlawful. A defeat for the government could turbo charge GBP exchange rates on hopes it would hinder Johnson’s ability to push through a no-deal Brexit.
In the spotlight for EUR investors will be the publication of the Eurozone’s latest PMI figures at the start of the week.
These could put more pressure on the Euro if they show that growth in the bloc’s private sector remained weak this month.