GBP/EUR: Euro Rallies vs. Pound As Italy Seeks To Avoid Debt Crisis

GBP is flat against the EUR on Friday.

  • Sterling struck 2-month lows vs. the euro, before clawing back the losses
  • The euro (EUR) has been surging on rising hopes for progress towards Eurobonds
  • EU’s De Rynck comments on EU fisheries policy for Brexit –  Real time exchange rates

GBP/EUR was lower by 12 pips (+0.10%) to 1.1106 as of 3pm GMT.

The currency pair sank quickly to 1.105 but later recovered the losses after a lack of follow through with some buying taking place ahead of the 1.10 round number.

GBP: Fisheries still a top dispute in post-Brexit talks

While Brexit is an ever-present weight around the neck of the British currency, it was mostly a matter of euro-strength that pulled the pound weaker on Friday.

On the matter of the post-Brexit trade talks set to resume next week, the EU’s De Rynck said “It is a tall order to get an agreement on fisheries by the deadline.” Fishing waters have been a top political issue for both sides with the EU demanding continued unfettered access as part of a trade deal while the UK sees the issue as a matter of territorial sovereignty. De Rynck, who is a senior advisor to Chief Negotiator Barnier adde that there is “no appetite on the EU side to revise the mandate on fisheries.”

EUR: Rising hope for Eurobonds (Coronabonds)

The euro was a standout winner across FX markets on Friday, making a decisive breakout beyond 1.10 to the dollar – which traders view as a possible sign of a new bullish trend in the exchange rate.

Investors are taking the view that France, Germany and Senior politicians at an EU level can broker a compromise on the proposed €750 billion Recovery Fund that satisfies those countries most in need of help in the pandemic who don’t want to take on more debt and the so-called Frugal counties that are concerned about wedding themselves to their less credit-worthy neighbours. The rise in the euro comes ahead of next week’s ECB monetary policy decision, where expectations are building for an expansion of the PEPP.

 


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