The pound managed to stay within a “tight range” to the euro yesterday despite Brexit concerns dominating the headlines. Today, the pound is currently trading at a rate of 1.1118 against the euro according to Bloomberg at the time of writing. The rate is currently dipping just below the 1.12 handle, leaving it in a vulnerable position today.
- Pound to euro exchange rate: GBP ‘struggles’ against the euro
At roughly this time yesterday, the pound was trading at 1.1136 against the euro, which is higher than today’s rate.
Although the rate seems to be lower, the rates stayed in relatively close range to one another.
Michael Brown, Currency Expert at Caxton FX, spoke to Express.co.uk to provide exclusive insight into the current exchange rate.
“Sterling trod water against the euro yesterday, trading within a relatively tight range, as the day was dominated by month-end dollar selling, resulting in relatively little volatility for currency crosses,” he said.
“Today, that theme is likely to continue, while investors will also continue to pay close attention to simmering Sino-US tensions.”
US President Donald Trump signalled on Thursday that a China-US trade deal may be off the table.
On Thursday, China voted to overthrow Hong Kong’s independence with a new national security law.
Trump said to reporters: “We are not happy with China.
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“We are not happy with what’s happened.”
But as well as China’s recent actions in Hong Kong, Trump has also been critical of China’s alleged hand in the coronavirus outbreak which originated in Wuhan.
The pandemic has now claimed the lives of more than 350,000 worldwide.
George Vessey, UK Currency Strategist from Western Union Business Solutions said that a “disruptive” Brexit may mean investors lose confidence.
He said: “The pound extended its retreat from two-week peaks yesterday as investors weighed up the possibility of negative interest rates in the UK and increasing fears of a disruptive Brexit.
“The UK’s chief Brexit negotiator, David Frost, reiterated that an extension to the transition period is not an option, which fuelled further sterling weakness.
“Mr Frost raised concerns about the UK-EU trade talks lacking progress – with a deal on fisheries still proving difficult despite the EU seemingly ready to make some compromises earlier this week.
“Although there has been optimism across financial markets about a faster economic recovery amid the easing lockdown measures, the pound will remain exposed to headline risks around Brexit as the last round of talks next month draw nearer ahead of the special EU summit later in the month.”
Mr Vessey also said that fears of a second wave of coronavirus infections are also impacting sterling.
He added: “GBP/USD fell around 1.5 cents from the its high yesterday, whilst GBP/EUR snapped a four-day winning streak, to end over a cent lower.
“Fears of a second wave of infections as Britain exit’s lockdown, coupled with no-trade deal Brexit woes, negative interest rates and soaring government debt all point towards further downside for sterling.
“GBP/USD may soon test $1.20, whilst €1.10 remains a key support for GBP/EUR.”
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