Brexit talks dictate GBP/EUR levels (Daniel Johnson)

Davis and Barnier loggerheads

We have seen GBP/EUR fall following poor economic data releases from the UK and also negative comments from Michel Barnier in regards to Brexit negotiations. We have seen since Stelring rally back to 1.13 in this afternoons trading.

GBP/EUR will be largely dictated by the progress of phase two Brexit talks. David Davis, the UK chief negotiator and EU chief negotiator, Michel Barnier are at loggerheads. Davis has accused EU services of advising UK businesses to leave the UK or risk losing their contracts. This does not sit well with the UK negotiation team considering the UK is still a member of the EU. Barnier could be accused of playing hard ball in an attempt to warn off other members of the EU following in the UK’s foot steps and exiting the bloc.

Despite the uncertainty surrounding Brexit talks I am not of the opinion we will see huge falls in Sterlng value. The market moves on rumour aswell as fact and the level of uncertainty surrounding Brexit at present makes me think it does not have much room for further falls. I would be surpised to see GBP/EUR fall below 1.11 short term. If you a Euro seller I would not be hanging on for small gains.

If you are buying Euros short to medium term I would not have high expectations. The highest GBP/EUR has been in nine months is 1.15 and it has only been available for very small windows of opportunity. Considering the current situation, if the market hits above 1.14 I would consider performing my trade.

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