The GBP/EUR exchange rate traded in a wide range again this week, as a result of continued Brexit jitters.
Pound Fluctuates amid Brexit Jitters
The Pound got off to a strong start this week, with the GBP/EUR exchange rate climbing to a new two-month high as a new coronavirus vaccine, of which the UK government has pre-ordered 100 million doses, reported up to 90% efficacy.
But it didn’t take long for Sterling to come tumbling back to earth, in the face of renewed Brexit jitters.
This anxiety came in the wake of comments from the European Commission president, Ursula von der Leyen, in which she cast doubts over the possibility of a Brexit deal as she suggested that a few key issues continue to block an agreement.
The Pound then fluctuated through the latter half of the week amidst some back and forth over whether or not the EU’s Chief Brexit negotiator Michel Barnier would travel to London to continue trade negotiations.
The Euro, meanwhile, opened the week on weak footing, as the publication of the Eurozone’s latest PMIs revealed economic activity in the bloc contracted at a faster-than-expected pace in November, fueling fears of a double-dip recession.
However, the single currency was able to rebound later in the week as broad USD weakness offset some underwhelming EUR data releases.
Brexit to Continue to Dominate Sentiment
Looking ahead to next week’s session, it’s more than likely that Brexit developments will continue to act as the main catalyst of movement in the Pound to Euro exchange rate.
Talk of an imminent deal could help to underpin Sterling, but until there is a formal announcement of a deal any upside is likely to remain limited in scope.
Conversely any headlines alluding to setbacks or delays could also see the Pound slump.
Meanwhile, European coronavirus statistics will be the main focus for EUR investors next week, as a sustained fall in new cases will need to be seen if countries such as France are to reopen next month.
Also of note to EUR investors will be the Eurozone’s latest consumer price index, with the Euro poised to fall if the bloc remained in a state of deflation in November.