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GBP/EUR: Pound Extends Losses On Brexit Concerns

11th June 2020

EU Chief negotiator warned the UK over cherry picking in trade talks
UK house prices expected to remain depressed
Euro received support from weaker US Dollar post Fed announcement
At 05:15 UTC, Pound to Euro (GBP/EUR) trades -0.2% at €1.1176

The Pound is extending losses for a third straight session on Thursday. The Pound Euro exchange rate settled -0.15% at €1.1210 on Wednesday.

At 05:15 UTC, GBP/EUR trades -0.2% through €1.12 at €1.1176 ahead of a quiet day on both the UK and Eurozone economic calendar.

Check real time GBP to EUR exchange rate

Despite more lockdown restrictions being eased, the Pound is under pressure as investors turn their attention to Brexit. The European Union chief negotiator Michel Barnier gave some stark warnings to the UK whilst speaking at the European Social Economic Committee. He said that Britain will not be allowed to “cherry pick” in trade talks, announcing that Britain is demanding a lot more from the EU than Canada, Japan or other partners. His comments highlighted the distance that still remains between the two sides in achieving a trade deal, as the clock ticks towards the end of the transition period on 31^st December.

Economic data was also adding to the gloom on Thursday after British surveyors predicted further falls in house prices in the next few months as the economy deteriorates. The RICS index for house prices in the next three months was -43 with this only expected to pick up to -16 over the coming year. The data reveals the poor health of the UK economy, dragging on the Pound.

With no economic data due for release sterling will be driven by sentiment. Tomorrow sees the release of a slew of UK data including GDP figures for April which are expected to show a -18.4% contraction.

The Euro pushed higher in the previous session mainly thanks to the weaker US Dollar. The Euro trades inversely to the US Dollar. With no Eurozone economic data to drive the common currency, the Euro looked across the Atlantic for direction.

The US Federal Reserve predicted that it would not be raising interest rates until around 2022, in a dovish speech which caught some off guard given the strong US jobs report on Friday. The US Dollar dropped lower boosting the Euro.

There is no high impacting Eurozone data today. Investors will look ahead to industrial production data tomorrow.