The British pound (GBP) is lower against the euro (EUR) on Wednesday.
The euro jumped after the European Commission, the executive body of the EU upped the ante with its own proposal for a €750 billion virus recovery fund, up from the €500 billion tabled by France and Germany.
Sterling was under the usual Brexit-induced pressure with EU and UK officials butting heads before another round of talks next week.
Pound to Euro exchange rate was lower by 105 pips (-0.92%) to 1.1124 as of 3pm GMT.
GBP/EUR stalled early on near 1.125 and subsequently tanked over 100 pips beneath 1.115. Yesterday the exchange rate had gained +0.42%. Today’s losses cap a 4-day winning streak and take the exchange rate lower for the week by -0.34%
GBP: Transition period extension countdown
It’s now just a month to go until the UK needs to request an extension to the Brexit transition period beyond December 31 this year if it feels more time is needed to secure an EU trade deal.
The European Union negotiating team has said the United Kingdom will need to ask for an extension before June 30, if it is going to ask. For the moment it doesn’t appear they will – a UK spokesman said there is no change to the government position and that the Brexit transition will end on schedule.
EUR: European Commission €750 Recovery Fund
European Commission today suggested an extra €250 billion in loans on top of the €500 billion in grants proposed in the Franco-German deal to total €750 billion in EU rescue money for countries hit by the pandemic.
The euro jumped on the possibility of the extra money being pumped into the European economy. However, the self-styled ‘Frugal four’ member states already rejected the Macron-Merkel €500 billion, so may not look too kindly on €750 billion, although it was more the matter of grants over loans that they opposed.
Under the new proposal, Italy would get €82 billion in grants and Spain €77 billion. Italy’s 10-year bond yield fell to a 7-week low, demonstrating falling Eurozone risk, typically a good thing for the euro.
