GBP/EUR: UK Brexit Trade Negotiations Mandate To Be Released Today

The pound was unable to hold onto gains from earlier in the week and tumbled lower versus the euro on Wednesday. The pound to euro exchange rate dropped to a 2-week low of €1.1845, before closing the session just a few points higher. As post Brexit trade deal nerves dominate any gains in the pound will be capped.

GBP/EUR: Pound Investors Uncertain Of Deal Being Reached

Boris Johnson is due to publish Britain’s goals for trade talks with the EU today. Boris Johnson’s mandate is expected to insist that Britain should enjoy complete control over its own rules in areas such as state aid, environment and labour laws. This is unlikely to sit well with the EU who said in their own mandate that a level playing field on which both sides will do business was a pre-requisite. In a sign of difficult times ahead, the UK’s chief negotiator has said that signing up to follow EU standards would defeat the point of Brexit

EU officials consider that Boris Johnson is going against the political declaration agreed by Theresa May to create a “robust” and “mutually agreed regime to ensure “fair and open competition”. Downing Street responded by saying these were merely aspirations.

The recent exchanges between the two sides is giving a clear indication as to how complex and challenging these trade talks will be. Pound traders are growing more doubtful that the two sides will reach an agreement, which is dragging the pound lower.

Coronavirus Headlines Keep Euro Mood Cautious

The absence of any high impacting eurozone data kept euro investors focused on sentiment stemming from coronavirus headlines on Wednesday. The euro moved modestly higher in the previous session as panic eased. Even so concerns over the possible economic impact of coronavirus kept investors in a cautious mood.

The eurozone economy was already showing signs of slowing prior to the coronavirus outbreak. Euro investors are growing increasingly aware that economic growth in the region could falter further owing to the trade disruption from covid-19 outbreak.

With no high impacting eurozone data due for release today, investors will continue to watch coronavirus headlines closely.

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