Pound euro exchange rate driven by ‘speculation’ as Brexit trade talks hit ‘crunch week’

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The pound gained some ground on the euro for the first time in weeks. Sterling has been battered recently following a halt in post-Brexit trade talk negotiations of late. Fears of the UK leaving the European Union without a deal in place are on the up as Britain creeps closer to that December 31 deadline.

A deal between the UK and EU needs to be agreed on both sides by this date otherwise the UK will leave with no trade deal in place.

The pound is currently trading at 1.1154 against the euro, according to Bloomberg at the time of writing.

This is above last week’s rate of 1.1128 when the pound gained against the euro.

Michael Brown, currency expert at Caxton FX, an international payments and foreign exchange firm, spoke to Express.co.uk about the latest figures this morning.

He said: “Sterling notched its first gain in three against the euro on Friday, amid rather quiet trading conditions, ahead of another crunch week of Brexit trade talks, which are now coming down to the wire.

“While a handful of sticking points remain, draft legal texts have been mostly completed, though there is of course no guarantee that an agreement will be struck this week or next.

“Given this crunch point at which we now find ourselves, the pound will increasingly be driven by rumour and speculation, ahead of Thursday’s EU Council summit.

“The eventual outcome for sterling is, however, binary; strength on a deal, weakness without a deal.”

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Last week, the Prime Minister’s top aide Dominic Cummings resigned.

According to Currency Strategist George Vessey at Western Union, the pound “suffered” after the move but soon bounced back.

Mr Vessey said: “Amidst a global pandemic and pivotal UK-EU trade talks, Boris Johnson’s chief adviser and the architect of the Brexit Vote Leave campaign – Dominic Cummings – dramatically announced his resignation last week.

“The pound suffered a painful day in the markets yesterday but it has rebounded against most currencies this morning.

“It may just be a technical bounce for sterling given the circa one percent decline suffered against numerous currency peers yesterday.

“However, as the Brexit clock ticks ever closer to critical deadlines, market participants may feel this exodus of Vote Leave veterans from Downing Street could suggest Mr Johnson is about to make compromises to secure a trade deal with the EU, although Mr Cummings has completely dismissed these rumours.

“Nevertheless, one can’t ignore the potential impact on Brexit negotiations given Britain’s chief EU negotiator, David Frost, considered resigning too.

“GBP/USD has fallen from above nine-week highs, around $1.33 this week, towards the $1.31 handle and GBP/EUR has fallen from €1.13 towards €1.11.

“The lack of upside conviction reflects the fading risk appetite and ongoing domestic uncertainties weighing on the UK economy and the pound.”

So what does this mean for travel money?

Post Office Travel Money is currently offering a rate of €1.0720 for over £400.

For a spend of £500 or more, today’s online rate currently stands at €1.0875.

And finally, a spend of £1000 or more will get you a rate of €1.0931.

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