GBP/EUR: Pound Rebounds, Brexit Talks In Focus

This week is a quiet week for UK economic data. Pound investors are focused mainly on Brexit the week before trade talks with the EU are due to start. With both sides hardening their stance the pound dropped 0.3% versus the euro on Monday, striking a low of €1.1893, before closing the session at €1.1915.

GBP/EUR is pushing higher in early trade on Tuesday.

GBP to EUR: No Deal Brexit Fears Drive The Pound

Whilst the rest of the world was glued to Coronavirus developments on Monday, pound investors were fretting over Brexit. Both the EU and the UK have hardened their stance ahead of next week’s Brexit trade talks. France warning that they would not be blackmailed into accepting a bad trade deal because of a British time limit was a recent low point.

UK Prime Minister Boris Johnson insists that the transition period cannot be extended beyond 31^st December, even if that means the UK leaving the EU without a trade deal in place.

Today there is little on the economic calendar to distract pound investors. With just mid-tier CBI retail sales figures, Brexit will remain in full focus and would keep the pressure on the pound.

Euro Looks To German GDP

The euro managed to move higher versus the pound in the previous session even as coronavirus fears stepped up a gear. Whilst the number of coronavirus cases and deaths in Italy are still growing, euro investors found some comfort in the fact that the economic data from the bloc was still holding up.

German IFO business sentiment data actually unexpectedly increased. The IFO sentiment index is considered to be Germany’s most prominent leading indicator. It increased from 96 in January to 96.1 in February. This together with last week’s, better than forecast PMI readings paint a more encouraging picture of German growth prospects.

Coronavirus developments will remain in focus. Investors will be watching carefully to see what measures the eurozone’s third largest economy puts in place to prevent the spread of corornavirus.

On the economic calendar, Germany will be under the spotlight as its GDP is expected to come in at 0.3% quarter on quarter in the fourth quarter, in the final estimate.

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