GBP/EUR Exchange Rate Falls as Boris Johnson Says UK Could Live Without Post-Brexit Trade Deal
The Pound to Euro (GBP/EUR) exchange rate fell by -0.2% today, with the pairing currently trading at round €1.101.
The Pound (GBP) dipped today as UK markets focus on Brexit headlines following this weekend’s video conference between Prime Minister Boris Johnson and the European Commission’s President, Ursula von der Leyen.
Mr Johnson has commented that he wants a post-Brexit trade deal with the EU to be reached by October 15th.
However, Sterling investors have remained cautious as the Prime Minister also said the UK could live without a deal from January 1st.
Mr Johnson told the BBC’s Andrew Marr show:
‘There are some difficult issues that need to be fixed and there’s no question that the EU needs to understand that we are utterly serious about needing to control our own laws and our own regulations.’
In UK economic news, today will see the release of September’s Services PMI for September.
If this shows any marked signs of improvement, then GBP could head higher as the nation’s largest sector improves.
This evening will see the release of September’s BRC Like-for-Like Retail Sales data.
Any signs of the retail sector lagging behind would prove GBP-negative.
Euro (EUR) Edges Higher Despite Signs of a Stalling Eurozone Economy
The Euro (EUR) edged higher today after the release of the Eurozone’s PMI Composite figure for September beat forecasts and rose from 50.1 to 50.4.
However, the Eurozone’s economy only just scrapped by stalling, with Chris Williamson, the Chief Business Economist at IHS Markit, saying that the ‘chances of a renewed downturn in the fourth quarter have clearly risen’.
Mr Williamson added:
‘Spain has been especially hard-hit as rising Covid19 case numbers led to further disruptions to daily life. With the exception of the March-to-May period at the height of the first wave of infections, Spain’s service sector contraction in September was the largest recorded since November 2012.’
In other Eurozone data, today will see the release of the latest Retail Sales report for August. If this posts a notable increase, then the EUR/GBP exchange rate could head higher.
Later today will also see a speech from Dr Kens Weidmann, the president of the Deutsche Bundesbank.
Any dovishness about the Eurozone’s economy would prove EUR-negative.
GBP/EUR Outlook: Could Lack of Brexit Progress Drag Down Sterling?
Pound (GBP) traders will be looking ahead to tomorrow’s release of September’s final UK Construction PMI.
If this continues to show a lagging UK economy, then Sterling would suffer.
Meanwhile, EUR investors will be eyeing tomorrow’s release of Germany’s Factory Orders for August.
With forecasts already dismal, the single currency could shed some of its gain as the Eurozone’s largest economy struggles.
The GBP/EUR exchange rate will likely remain subdued this week as focus turns to UK-EU Brexit developments.
If progress remains slow – or non-existent – then Sterling will suffer as a post-Brexit trade deal appears increasingly unlikely.