The British pound is little changed against the euro on Monday.
- Leaders promised ‘new momentum’ in high level Brexit talks today
- EU have accepted UK will not extend transition period
- Euro and pound flat as FX traders focus on USD
- Pound-euro exchange rate declined -0.71% last week
GBP/EUR was higher by 8 pips (+0.06%) to 1.1145 as of 3pm GMT.
The currency pair made a run below 1.11 in early trading but the downside momentum subsided and it returned back to where it started the day, just under 1.115.
GBP: ‘High level’ talks in good spirit
The British pound was little moved on a day which seemed to finally put the idea of an extension to the Brexit transition period to bed. UK Prime Minister Boris Johnson held a video conference call with European Council president Charles Michel, European Commission president Ursula von der Leyen and European Parliament president David Sassoli.
It would have been a true shock if Prime Minister Boris Johnson had agreed with EU leaders today to extend the UK leaving the EU beyond December 31, and indeed he didn’t. Ms von der Leyen tweeted that they had “noted the UK’s decision not to extend the transition period & agreed to deliver the best deal for our citizens.”
Despite no positive surprise on the extension, the talks seemed to carry a positive tone with all four leaders promising to add fresh momentum into the negotiations.
EUR: Euro treading water with USD in focus
With most of the focus in currency markets on the US dollar, and whether it would continue a strong recovery that begun last week, the action in ‘cross currency pairs’ like EUR/GBP (GBP/EUR) was minimal.
A surprisingly dovish Federal Reserve had stoked fears of a prolonged economic downturn in the United States in its forecasts last week. That had prompted a rally in the dollar and the worst weekly decline in stock markets since March. The dollar was marching higher again on Monday but gave up some of the gains as the day went on.
After a slow day on the European economic calendar, things pick up tomorrow when Germany reports inflation data for May.
