Sterling ‘loses further ground’ as post-Brexit negotiations reach critical point

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Post-Brexit trade talks have been extended as both chief negotiators for the UK and EU continue in London until Wednesday. The EU’s chief negotiator Michel Barnier delayed his return to Brussels and is expected to remain in the UK until Wednesday. He will continue to hash out talks with his UK counterpart Lord Frost.

Mr Barnier arrived in London on Thursday to continue the talks and was expected to leave the UK on Sunday.

The negotiator’s extended time in the UK has been described as “a very good sign” by Northern Ireland Secretary Brandon Lewis, spelling hope for a post-Brexit trade deal by the end of the year.

Brexit trade talks have continued to have a dramatic impact on the exchange rate over the last few months, with investors keeping a stern eye on any signs of a no-deal.

The pound is currently trading at 1.0987 against the euro, according to Bloomberg at the time of writing.

This is well below Friday’s rate of 1.1071 which was above that all important 1.10 handle.

Michael Brown, currency expert at Caxton FX, spoke to Express.co.uk regarding the latest exchange rate figures.

He said: “Sterling lost further ground against the euro on Friday, handing the bears near-term control, as the market continued to wait for news from the restarted post-Brexit trade talks.

“That news, if it arrives, will likely be the main driver of the pound this week; though it’s worth noting that silence is often a promising sign in EU negotiations, and can indicate significant progress being made behind closed doors.

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“Nevertheless, a lack of headlines could cause some weak sterling longs to be flushed out, likely making for something of a choppy week.”

Time is currently running out for the UK as the Brexit transition period deadline looms at the end of the year.

The transition period will come to an end on December 31.

If a deal is not in place between the UK and the EU, then Britain will begin trading with the bloc on World Trade Organisation terms.

The main obstacles to a deal remain fishing rights, so-called “level playing field” rules to ensure fair competition and governance arrangements for any agreement.

However, despite the deadline fast-approaching George Vessey, a UK Currency Strategist at Western Union Business Solutions seemed hopeful that a compromise could be in play.

He said: “EU negotiator Michel Barnier acknowledged the UK’s sovereign independence is paramount, which was viewed as a signal that Brussels was ready to compromise.

“At present, a deal seems more likely than not, despite the gaps in fisheries and level playing field issues that still need bridging.”

He continued: “Market participants were eager to pounce on any signs of optimism though and the positive soundbites that eventually came out sent traders flocking for the pound.”

But Mr Vessey also warned that even a “limited” trade deal could impact hurt the UK economy.

He added: “UK-EU trade talks resume but the worry is that the recent rally may be a classic case of ‘buy the rumour sell the fact’ for the pound and we see sterling actually weaken from here because a limited trade deal would still hurt the fragile UK economy.”

So what does that mean for travel money?

The Post Office is currently offering a reasonable pound to euro exchange rate.

The company is offering a rate of 1.0608 for amounts over £400, 1.0608 for amounts over £500 and 1.0817 for amounts over £1,000.

Britons are being urged to check travel advice before they travel during the coronavirus pandemic.

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