GBP/EUR Exchange Rate Soars to Six-Week High as Brexit Talks Resume

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The GBP/EUR exchange rate rallied strongly this week, as the Pound was catapulted higher by renewed Brexit optimism. 

Pound Skyrockets as Brexit Deal ‘Within Reach’ 

After a fleeting rally at the very start of the session, the Pound spent most of the first half of the week on the defensive, in response to fresh no-deal Brexit fears. 

This came as Boris Johnson announced that trade talks between the UK and EU were ‘over’, arguing there is ‘no point’ to continuing talks unless the EU is prepared to discuss the detailed legal text of a partnership. 

However the Pound then mounted a startling recovery in mid-week trade, amidst renewed hopes for a deal, after EU Chief Negotiator Michel Barnier suggested that a deal is ‘within reach’ and enticed Johnson back to the negotiating table by stated that the EU is ‘ready to discuss all subjects on basis of legal text’. 

The Euro, meanwhile, benefitted from an improved market mood and weakness in the US Dollar through the first half of the week. 

However, the single currency lost a little lustre as we entered the second half of the week after EUR investors were unnerved by some alarming coronavirus statistics coming from Europe. 

This weakness in the Euro was then compounded by the publication of the Eurozone’s latest PMI figures, as October’s preliminary releases revealed the bloc’s private sector fell back into contraction. 

Eurozone GDP Centre Stage Next Week  

Looking ahead, the spotlight next week will undoubtedly be on the Eurozone’s latest GDP release. 

The preliminary estimate for the third quarter is forecast to show a return to growth as coronavirus restrictions were lifted across the bloc. 

However, with the Eurozone likely headed for another contraction in the fourth quarter as a second wave sweeps across Europe, anything short of a miracle rebound in growth is unlikely to offer much support to the Euro. 

Also set to influence EUR exchange rates will be the European Central Bank’s (ECB) latest rate decision. No policy changes are expected from the ECB this week but the Euro is likely to face some pressure if Europe’s coronavirus woes result in a cautious outlook from the bank.    

Meanwhile, in the absence of any notable UK data, GBP investors are likely to remain laser focused on Brexit, with any headlines coming out of the ‘intensified’ talks between the UK and EU likely to result in choppy trade in the Pound. 

Sterling sentiment may also be driven by UK coronavirus developments, amid ongoing speculation the country is headed for another lockdown. 

If you’ve got a GBP/EUR currency transfer to arrange, the team at TorFX are on hand to help. Get started now to access bank-beating exchange rates and fast, free transfers.  

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