The British pound is higher against the euro on Friday.
- Brexit anxieties ease after week of talks end with good tone
- Positive US jobs surprise boosts markets
- Euro strength subsides after ECB Meeting yesterday
- Exchange rate is higher by +1.08% this week
GBP/EUR was higher by 138 pips (+1.25%) to 1.1245 as of 4pm GMT.
The currency pair found a based above 1.11 and eventually took off to beyond 1.12 before finding resistance just below 1.125.
GBP: Brexit face-to-face meetings to continue
Monthly Non-farm payrolls data from the United States was expected to show the unemployment rate had risen to nearly 20%. Instead- jobs were actually created in May and the rate of unemployment dropped from 14.7% to 13.3%. The positive surprise sent US shares soaring higher and riskier currencies like the British pound benefited from the risk-on sentiment.
The pound was able to benefit from the better tone in markets in large part because the post-Brexit trade talks did not finish with the same acrimony seen on previous occasions.
The UK’s Senior Negotiator David Frost said “We are willing to work hard to see whether at least the outline of a balanced agreement, covering all issues, can be reached soon.” And also announced he would hold a series of face-to-face meetings to get past the key hurdles.
There had been a sense of dread mid-way through this week that post-Brexit trade talks were on for another stalemate. That would leave the EU summit in June as the only last-minute opportunity to scramble together an agreement.
EUR: Gains subside after ECB Meeting
The euro is taking a breather after a series of positive developments this week. On Wednesday evening the German government announced its own 160 billion euro stimulus program and on Thursday the European Central Bank added another 600 billion euros to its PEPP bond-buying program.
At the same time European governments are working to strike a deal on a Europe-wide EU recovery fund. The two sources of stimulus together give the impression of a fiscal and monetary union, something many think the Eurozone needs to cast out the issues of the 2011 debt crisis.
