GBP/EUR: Pound Struggles vs. Euro As Brexit Debate Continues
  • Euro (EUR) rises on Brexit update
  • Germany enters hard lockdown from Wednesday
  • US Dollar (USD) decline on risk outflows as covid vaccine programme begins
  • US fiscal stimulus talks see slow progress

The Euro US Dollar  (EUR/USD) exchange rate is charging higher at the start of the week after ending the previous week approximately flat. The pair settled on Friday at US$1.2111, just 0.07% lower than where is had started the week. At 07:15 UTC, EUR/USD trades +0.3% at US$1.2150.

The Euro is jumping higher on news that UK -EU post Brexit talks will continue. Sunday had been set as a deadline by UK Prime Minister Boris Johnson and European Commission President Ursula von der Leyen. However, as with many other Brexit headlines, it proved to be soft with both sides will “to go the extra mile” to get a deal done.

The extension of the talks raised optimism that a last minute deal could still be reached. This is lifting the market mood as reflected in strong demand for domestic equities. EU Stoxx 50 trad +0.6% higher on the day.

News that German is entering into a harder lockdown as from Wednesday could keep gains in the common currency capped. All non-essential retailers and schools will close over the Christmas period until 10th January as covid cases and death hit record levels.

Data-wise Eurozone industrial production is expected to show a 2% in October compared to the previous month. This would be up from a -0.4% decline in September.

The US Dollar has kicked the week off on the back foot amid safe haven outflows as investors look for riskier investments.  The upbeat mood comes as the covid vaccination programme begins in the US today and as investors cheer some progress in US additional fiscal stimulus talks which overshadow surging covid cases in the US.

There is no high impacting US data due for release today. Investors will focus on risk sentiment ahead of US retail sales data and an FOMC rate decision later in the week.