The British pound is down against the euro on Wednesday.
- Pound dips as sentiment turns cautious before Tesla/Microsoft earnings
- Euro gains more ground after Recovery Fund agreement
- ECB’s Lagarde calls mix of grants and loans in recovery fund ‘good’
- UK ‘working assumption’ is trading on WTO terms with EU – Telegraph
GBP/EUR was lower by 55 pips (-0.49%) to 1.0987 as of 3pm GMT. This week the pound-euro exchange rate is just lower by -0.13%.
The currency pair slid below 1.105 in early trading and hit lows of 1.095 before rebounding to just under 1.10. Yesterday it fell -0.16%.
GBP: Telegraph pours cold water on idea of UK/EU trade deal
Broader sentiment was distinctly shakier with a big test for investor coming after the close on Wall Street when Tesla and Microsoft report quarterly earnings.
An article in the Daily Telegraph seems to have played a role in Sterling weakness today. According to the broadsheet newspaper the UK government is working on the assumption that a deal cannot be done in time for the Prime Minister’s July deadline. Negotiators are still in deadlock over fishing rights, governance, the role of the European Court of Justice (ECJ) and so-called level playing field guarantees, the newspaper reported.
A spokesperson for the Prime Minister later said “we remain committed to agreeing with the EU the outline for a balanced post Brexit agreement.” And that the “UK has not put a specific time frame on getting a trade deal with the US.”
EUR: LaGarde pleased with EU Recovery Deal
ECB President Christine Lagarde was commenting on the new EU Recovery deal agreed yesterday. She said the ”Loan and grant mixes are good… It could have been better, but it is reasonable.”
As a reminder on Tuesday, EU leaders agreed a €750 billion rescue package and an over €1 trillion 7-year budget. The Recovery fund will include €360 billion in loans and €390 billion in grants that don’t need to be repaid. The key point that has captivated the imagination of investors is that the money will be raised collectively by the EU Commission selling bonds.
