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GBP/EUR Races Higher as Brexit Optimism Surges

Last week’s high: €1.1388

Last week’s low: €1.1138

Pound Jumps on Brexit Hopes

The GBP/EUR exchange rate surged during last week’s session, climbing almost two cents on hopes that progress is finally being made in Brexit negotiations.

The majority of the Pound’s gains came on Tuesday evening as reports emerged that the UK government would be willing to offer a €50bn divorce payment in order to ensure that Britain meets its financial obligations.

Sterling sentiment was further bolstered on Thursday as The Times reported that the UK was close to a ‘breakthrough’ over the issue of the Irish border.

The news that the UK was close to resolving two of the main problems stalling Brexit talks was well received by markets, with observers now hopeful that talks are on track to allow trade discussions to begin later this month.

Meanwhile, movement in the Euro last week was largely dictated by a slew of German data, with the single currency finding little support as Germany’s inflation and retail sales figures both disappointed investors.

Euro Outlook: Brexit Sentiment to Dominate Sterling again this Week?

Looking ahead to this week’s session, the GBP/EUR exchange rate is likely to remain sensitive to Brexit developments as UK and EU officials meet for the latest round of talks.

Outside of Brexit, movement in the Pound is also likely to be influenced by the release of the UK’s all-important Service PMI on Tuesday, with an expected slide in activity in November possibly causing Sterling to relinquish some of its recent gains.

Meanwhile, the Euro may dip in the first half of the week as economists forecast that Eurozone retail sales growth will have plummeted from 0.7% to -0.7% in October.

However, the main focus for EUR investors this week will likely be the publication of the Eurozone’s latest GDP estimate, with confirmation that the bloc’s economy expanded at a solid 0.6% in the third quarter likely to bolster the appeal of the single currency.

Key Events

4th December

10:00 GR GDP Q3

09:30 UK Construction PMI Nov

5th December

09:00 EU Services PMI Nov

09:00 EU Composite PMI Nov

09:30 UK Services PMI Nov

10:00 EU Retail Sales Oct

6th December

07:00 DE Factory Orders Oct

7th December

08:30 UK House Price Index Nov

10:00 EU GDP Q3

8th December

07:00 DE Trade Balance Oct

09:30 UK Trade Balance Oct

09:30 UK Industrial Production Oct

 

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Thomas Taylor

Currency Dealer

T: (0) 1442 892 074

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