The Pound to Euro (GBP/EUR) exchange rate opened this morning with small gains after yesterday’s plummet of 1.4%, currently trading around €1.10.
Sterling suffered yesterday on Brexit deadline worries and the new mutant Covid-19 strain, as both continue to cause concern for the Pound, the release of GDP Growth for in Q3 was welcomed.
UK GDP expanded 16 percent in the three months to September 2020, revised from the first estimate of 15.5 percent growth and compared with a record 18.8 percent contraction in the previous three-month period.
However, a positive GDP growth doesn’t seem to be able to bolster the Sterling up to its levels of last week as Brexit continues to dominate headlines.
Prime Minister Boris Johnson came under fire last night during a press conference updating the British public on the new strain of Coronavirus, Mr Johnson could be seen sniggering when asked about a trade deal and said:
‘It’s almost the end of the year, you must know by now whether we’re going to get a free trade deal. Will we?’
The commented sparked concerns for GBP investors as it seems increasingly likely that the UK will leave the EU without a trade deal.
Euro (EUR) Falls as GfK Consumer Climate Indicator in Germany drops to a six-month low
The Euro (EUR) struggled this morning after a disappointing GfK Consumer Climate Indicator.
Sentiment dropped to a six-month low of -7.3 in December, from a revised -6.8 in the prior month, however beating forecasts of -8.8%.
Germany has experienced a sharp rise in infections in the second wave of the Coronavirus pandemic. With light lockdown measures in November not bringing the hoped reduction in new infections.
As a result at the start of December, Chancellor of Germany, Angela Merkel brought in stricter lockdown measures, which will lead to further uncertainty for the Eurozone’s largest economy.
Rolf Bürkl, GfK Consumer Expert, said:
‘At present, the savings indicator is the main factor driving the third decline in a row in the consumer climate. With the hard lockdown and the closure of most stores, the consumer climate is faced with yet another setback.’
‘There is reason to fear that the consumer climate is about to enter a very difficult phase in the coming weeks.’
GBP/EUR Outlook: Sterling at a Tipping Point as 2020 Comes to an End
Brexit developments will remain the driving force of the Pound to Euro (GBP/EUR) exchange rate.
Any indications of Downing Street remaining unmoved on key issues in UK-EU negotiations could spark fears of a no-deal Brexit, which would significantly weaken the Pound.
GBP investors will be looking at any further coronavirus developments, as the UK works to open its borders.
EUR investors will also be looking to keep a close eye on the new strain of coronavirus, hoping that it will not have made its way onto the continent.