GBP EUR Exchange Rate Extends Gains on Possibility of Irish Border Negotiation Progress

November 30, 2017 - Written by David Woodsmith

STORY LINK GBP EUR Exchange Rate Extends Gains on Possibility of Irish Border Negotiation Progress

The GBP EUR exchange rate extended its gains today as markets continued to respond positively to news that negotiations on the Irish border might soon reach a breakthrough and that trade talks could result as soon as January.

EU Prepares Offer on Two-Year Brexit Transition Deal, GBP Exchange Rate Climbs

EU leaders are reportedly preparing to offer London a two-year Brexit transitional deal now that negotiators are optimistic that a breakthrough on the subject of the Northern Ireland border is close.

In exchange for a decided, satisfactory sum in the ‘divorce settlement’ the EU will reportedly pledge to up the ante on a transition deal and maintain the present relationship for an extra two years – a disappointing prospect for Brexit advocates but one that has reassured investors and businesses.

The next two weeks will feature a range of key dates for negotiations, continuing tomorrow with EU Diplomats expected to assess the divorce bill, progress made on the Irish border and the rights of EU citizens (1st of December).

On the 4th of December UK Prime Minister Theresa May is expected to head to Brussels to meet with Jean Claude Juncker, an event that many are considering to be ‘crunch time’ for negotiations.

On the 6th of December all decisions will be drafted in preparation for the December Summit.

Finally, over the 14th and 15th of December EU leaders will meet for the summit in Brussels wherein the announcement will be made on the verdict of negotiations and we will learn what we can expect in the New Year.
Nonetheless, the current positive outlook continues to bolster the GBP EUR exchange rate, with many hoping that the long-lasting impasse will finally be dissolved.

Eurozone Inflation Disappoints, Pound Euro Exchange Rate (GBP EUR) Capitalises

The Euro has performed relatively well today against everything but the Pound, even with some disappointing data prints.

Headline inflation within the Eurozone printed at 1.5% year-on-year in November, beating the previous period’s 1.4% but missing the forecast of a 1.6% rise.

The core reading (favoured by the European Central Bank (ECB) when deciding monetary policy) was also disappointing, remaining stagnant at 0.9% and missing forecasts of growth of 1.0%.

In other news, German retail sales massively contracted in October from 4.1% to -1.4%, significantly below the market expectation of a 2.8% climb and unemployment throughout the bloc inched back from 8.9% to 8.8%.

Inflation remains a cause for concern for the bloc, with the latest 1.5% print being far below the bank’s intended target of 2%.

Whilst it could perceivably prevent the ECB from moving dovishly in 2018, economists still predict that inflation will pick up in the New Year – an outlook that has helped prevent the single currency from falling.

The largest contributor to today’s Euro strength, however, has been increased risk aversion amongst the markets, with investors apprehensive about the looming US Senate vote on tax reform.

Despite this sentiment the Pound retains the lead, and will likely continue to do so unless Brexit negotiation hopes diminish.

GBP EUR Exchange Rate Forecast: Manufacturing Stats in Focus

Both the Eurozone and the UK will be releasing manufacturing stats on Friday morning, with the UK’s November reading expected to demonstrate a small rise from 56.3 to 56.5.

This could further bolster demand for the Pound.

For the Eurozone, several measures of manufacturing are expected, the primary ones covering Germany and the Eurozone as a whole.

All of these releases are expected to demonstrate growth in November.

Beyond the data, however, the outlook for GBP EUR is positive but cautious; markets will likely wait to see exactly how much progress has been made in Brexit negotiations before committing too drastically.

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TAGS: Daily Currency Updates Euro Pound Forecasts