GBP EUR Recovers Ground on Expected Brexit Deal

GBP EUR exchange rates have rallied in afternoon trade recovering the losses seen this morning for this pair. The pound has seen a hugely volatile couple of days as the Brexit negotiations continue to be the main driving force for sterling exchange rates. The lack of agreement at the last moment yesterday when the deal was scuppered by the Democratic Unionist Party (DUP) saw sterling fall from its recent highs although it is clear that an agreement is the preferred option from all sides.

Any breakthrough which could come later this week could see the pound rally as the prospect of a no deal scenario becomes less likely. Those who are optimistic could see some excellent gains for those clients looking to buy Euros. The crunch point will be the end of next week after the EU summit 14th & 15th December. Any deal should be worked out by this time and any failure in not doing so would almost certainly see the pound weaken.

Data is light for both the UK and EU on Wednesday so focus will move to UK house price numbers on Thursday and EU Gross Domestic Product data. The EU had suffered until recently from very weak economic growth and so these numbers will be closely scrutinised by the European Central Bank. Economic data has largely been positive in recent weeks and confidence in the EU reached a 17 year high in November.

With Brexit negotiations between the relevant parties continuing then developments here will almost certainly overshadow the economic data. Once again it is politics which is having the biggest impact on GBP EUR rates and this is unlikely to change anytime soon with discussions expected to continue right up to the wire in 2019.

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