The Pound to Euro (GBP/EUR) exchange rate opened today retreating on any gains as EU nations unanimously approved the Brexit trade deal.
At the time of writing the GBP/EUR exchange rate is trading at around €1.1037.
Pound (GBP) Loses Momentum as Labour Revolt Worries Investors
The Pound (GBP) continues to falter after the UK-EU Brexit trade deal was approved by EU nations in a move that means the agreement can come into force on New Year’s Day – even though the European Parliament will not vote on the deal until February.
The Pound’s loss of momentum has been linked to concerns that the Brexit trade deal does not cover service and financial sectors.
Furthermore, Labour leader Sir Keir Starmer is facing a rebellion within his own party over his decision to back the EU trade deal in a Commons vote tomorrow – though it’s thought the deal will go through despite concerns.
A statement organised by ‘Another Europe is Possible and Labour for a Socialist Europe’ signed by prominent Labour MP’s and members read:
“We are witnessing an act of vandalism against our livelihoods, our rights and our horizons.
“We call on Labour, the Labour movement and other opposition parties not to support the Tories’ Brexit deal when it is put to a vote in the House of Commons.”
Even more, as coronavirus cases continue to rise, the Pound could suffer further losses as the threat of greater restrictions continue.
Euro (EUR) Supported by US Dollar (USD) Troubles
The Euro (EUR) has been supported this morning, as the single currency’s negative correlation with the US Dollar (USD) bolstered sentiment.
The US Dollar faces pressure today as demand for the safe-haven currency was weakened by Donald Trump finally relenting and signed the $900bn stimulus package into law over the weekend.
In the absence of any notable EUR data releases, investors continue to focus on the new coronavirus mutation.
GBP/EUR Exchange Rate Forecast: Further National Lockdown could Spell Trouble for the Pound
Looking ahead, into 2021, it’s unlikely the Pound to Euro (GBP/EUR) exchange rate should change too much, as markets continue to be calm after Christmas, ensures the pairing remains thin.
Furthermore, looking to the New Year, Sterling could face more troubles as a worsening coronavirus situation prompts calls for another nationwide lockdown to curb infection rates.
As a teacher’s union has said schools should remain closed in England until testing systems are ready.
The Euro could also struggle in the coming days as ongoing reports that the new, more-infectious strain of the coronavirus continues to be detected around the Eurozone.