GBP/EUR: Brexit Hopes Keep Pound Elevated Above Euro
  • Pound (GBP) falls on Brexit, COVID concerns
  • Flights banned for six African nations on COVID mutation fears
  • Euro (EUR) rises after ECB minutes reveal options remain open
  • ECB’s Lagarde to speak

The Pound Euro (GBP/EUR) exchange rate is falling lower on Friday, extending losses from the previous session. The pair settled -0.12% lower on Thursday at €1.1854, approximately in the middle of the trading range.  At 05:45 UTC, GBP/EUR trades -0.23% at €1.1854. The pair is set to fall 0.5% across the week after gaining 1.7% in the previous week.

The Pound is lost ground in the previous session following a speech from Bank of England governor Andrew Bailey, who back paddled on inflation fears causing the market to ease back on expectations of a rate hike possibly in December.

Today the Pound continues to fall lower amid Brexit concerns as Members of the French fisherman’s association said that they plan to bloc the Channel Tunnel and the port of Calais over a UK fishing license quarrel.

Today the EUR’s Brexit officer Maros Sefcovic will be in London to continue talks over the Northern Ireland border protocol. Signs of progress could help lift sterling off a nine-day low.

COVID concerns are also rising in the UK. Britain’s COVID cases are up by 10% in the past week. 47,240 new daily cases were reported on Thursday. Additionally, the UK has ban flights from six African nations over a new variant which has been identified and which would make vaccines less effective.

Meanwhile, the Euro is managing to grind higher, adding to yesterday’s gain. The common currency advanced yesterday despite weaker than expected German GFK Consumer confidence and a downward revision for the Q3 GDP.

Consumer morale in Germany tumbled to -1.6 in December, down 2.6 points. Inflationary fears in the Eurozone’s largest economy are now being compounded by fresh COVID concerns.

The minutes to the latest European Central Bank meeting showed that policy makers expect the central bank to increase its forecasts for inflation again in December. However, uncertainty remained over price growth in 2023 and 2024. The central bank appears to be keeping their options open.

ECB President Christine Lagarde is due speak today and could offer further guidance.