GBPEUR managed to solidify the gains made last week and continued to hold above the 1.20 level at the start of the Asian and into the European trading session – the first time it has held there since the Brexit referendum in 2016. As we mentioned last week, this is mainly down to the weakness of the single currency, with Bloomberg predicting EURUSD could reach parity, albeit requiring an 8% move.
The trade negotiations are keeping Sterling somewhat subdued for the time being, however, David Frost, the UK’s chief Brexit negotiator, is due to speak at a lecture in Brussels this evening. It is anticipated that he is going to say the UK requires no special trade deal, but instead just a replica of the deal that Europe already has in place with Canada and South Korea. These both have near tariff-free trade agreements but do not follow EU rules. Europe on the other hand, want the UK to align with matters such as tax, employment and the environment to ensure the UK does not become a competitor. As I wrote about last week, the fishing rights to the UK’s waters will also be hotly disputed.
The Times are quoting the French Foreign Minister, Jean-Yves Le Drain, as saying the two sides will “rip each other apart’ on trade”, meaning we could be in for a bumpy ride over the course of the next 12 months.
We have no data out today, with the US on a bank holiday for Presidents’ Day. It may be worth speaking with us to see how we can cement the gains which we have seen over the previous few trading days.
Have a great day,
Author: Jack Nicholls, Relationship Manager
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