The British pound is lower against the euro on Friday.
Sterling sunk after the UK / EU post-Brexit trade talks again ended with no major breakthrough and both sides admitting progress was scant.
The euro benefited from the view in markets that the UK has more to lose from a failed EU/UK trade arrangement than the EU.
Pound to Euro was lower by 102 pips (-0.91%) to 1.1212 as of 3pm GMT.
GBP/EUR gave up the 1.13 level to sink 100 pips toward 1.12 and a new 6-week low. Yesterday the exchange rate rose +0.1% meaning a -2.1% decline on the week.
GBP: Lack of Brexit progress hits the pound
Folding in today’s declines, measured in dollars, the pound is now the worst performing G10 currency over the past month. Traders are expressing a belief that the UK economy will underperform the major economies of Asia, Europe and the US by selling pounds against the respective currencies.
The pound-euro exchange rate has broken down from a month-long sideways range, triggered by disappointment at a stalemate in EU/UK trade negotiations. The breakdown in price tends to imply further weakness ahead.
The UK’s chief negotiator David Frost said today that “very limited progress” was made in post-Brexit EU/UK trade talks this week. The UK negotiating team is calling on a change of approach by the EU and plans to make public the legal draft texts it has given to the EU next week.
EUR: Euro boosted by Germany stimulus
EU Chief Negotiator Michel Barnier said the progress was “disappointing” and told the UK that “You cannot have the best of both worlds” adding that he was “not optimistic” that a deal could be reached. The next round of negotiations start June 1st.
The euro saw a small gain across the board over the prospect of a new German stimulus program to be announced in June and some small but growing hopes for the creation of a joint recovery fund at next week’s Eurogroup meeting.
The gains came despite German Q1 GDP and French consumer inflation data missing expectations.
