- Pound (GBP) jumps as talks are extended beyond another deadline
- 3 weeks until the end of the transition period
- Euro (EUR) trades mixed versus peers as Germany tightens lockdown restrictions
- Eurozone industrial production data in focus
The Pound Euro (GBP/EUR) exchange rate is charging higher at the start of the week after steep losses in the previous week. The pair shed -1.5% across the previous week settling on Friday at €1.0915, up from a three month low of €1.0833 hit earlier on Friday. At 05:15 UTC, GBP/EUR trades +0.6% at €1.0976, easing back from overnight high €1.1002
The Pound jumped on the open and holds those gains after the UK and the EU agreed that they would continue talking in an attempt to reach a Brexit trade deal. Sunday had been set as a deadline for a trade deal, however, as with many deadlines before it, it has proved to be a soft deadline, raising hopes of a last-minute deal.
There are just three weeks to go until the transition period ends many had hoped for a breakthrough by Sunday, or at least clarity if the UK was going to leave the bloc without a deal. Instead it looks like Brexit headlines could drive sterling for another week.
If a trade deal isn’t agreed by the end of the year, decades of free movement of goods and services as well as people and capital will come to an abrupt end.
The Euro is trading lower as it was announced over the weekend that Germany will go into hard lockdown over the Christmas period in an attempt to bring the surging number of covid cases and deaths under control.
Non-essential sahops and schools will close as from Wednesday and remain shut until 10th January. A move which will hit Germany’s economy hard after it had showed signs of a solid recovery in recent months.
Eurozone industrial production is due to be released early in the European session. Expectations are for industrial output to have increased 2% month on month in October, well up from -0.4% decline in September.