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Brexit trade talks have become one of the main focuses of traders in recent weeks. Though there has been little in the way of a “breakthrough”, hope that a sea could be struck before the end of the month saw traders erring in favour of the pound.
For the second day running, yesterday the pound “gained ground against the euro”.
However, this had little to do with a sudden agreement between UK and EU leaders.
Michael Brown, currency expert at Caxton FX spoke exclusively with Express.co.uk to share his insight into the exchange rate.
He explained: “Sterling gained ground against the euro yesterday, not due to any kind of breakthrough in the Brexit talks, but as the pair piggybacked on weakness in the euro against the greenback.
“Once more, however, €1.1280 held firm as stiff resistance.
“Today, markets will remain on alert for headlines from the post-Brexit trade talks, with nothing of note on the data docket.”
The pound is currently trading at a rate of 1.1260 against the euro according to Bloomberg at the time of writing.
Though Brexit negotiations remain underway, the deadline is ticking ever-closer.
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According to Mr Brown, there is some positivity amongst traders, who believe a deal could be struck “whether this week or into December.”
George Vessey, UK currency strategist for Western Union Business Solutions added: “A UK-EU trade deal would be the best scenario for both sides and help generate growth in what is a fragile, pandemic-stricken climate.
“Eyes are on the easing of second lockdowns and how quickly economies can bounce back.
“If the UK and EU fail to reach a deal and trade on World Trade Organisation terms, then this will ramp up trade costs, in the form of higher tariffs, quotas and other non-tariff barriers.
“Based on past performance, when no-deal Brexit fears rise, the pound falls and when hopes of a deal rise, the pound rises.
“The market is currently pricing in more chance of a deal, hence sterling’s recent uplift but this increases the downside risk for sterling if a deal is not reached.”
He continued: “GBP/EUR is also climbing this morning though on hopes of a trade deal being agreed this week. The currency pair has hurdled the €1.12 handle and could challenge €1.14-€1.15 if a deal is confirmed.”
Though the lockdown situation is developing at varying paces across Europe, in England Prime Minister Boris Johnson has confirmed his latest lockdown will end on December 2.
Though much of the country will be forced into higher tiers, with shops reopening and some nonessential businesses reopening, there is hope for some economic stimulation throughout December.
There is also good news for travel, with the 14-day quarantine period now being reduced to just five days along with a test as parts of the new “test to release scheme”.
Whether Britons have leftover travel money or are gearing up for December travels, the good news is most currency exchange outlets will be reopening their doors.
One of the key ways to secure the best rates is to shop around, according to experts.
International currency providers Caxton FX’s top tip for buying foreign currency is to be aware of the financial markets.
“Sign up for a rate market alert on any of your currencies,” advises foreign exchange expert Rehan Ansari.
“It could potentially save you hundreds if the currency fluctuates.”
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