Brexit: End of talks are ‘rapidly approaching’ says Oliver Dowden
The pound euro exchange rate continues to be driven by Brexit uncertainty as the possibility of the UK leaving the EU without a trade deal in place becomes more likely. The Prime Minister Boris Johnson has said there is a “strong possibility” a trade deal will not be agreed by the two sides. Mr Johnson has warned businesses to prepare for the likelihood of a no deal outcome.
Key obstacles including competition rules and fishing rights continue to leave the duo in a deadlock of sorts.
News stemming from the talks continues to have a strong impact on sterling and those looking to cash-in any leftover euros.
The pound is currently trading at 1.0959 against the euro, according to Bloomberg at the time of writing.
This is below Wednesday’s rate of 1.1056, with the exchange rate now striking below that critical 1.10 handle.
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Michael Brown, currency expert at international payments and foreign exchange firm Caxton FX, spoke to Express.co.uk regarding the latest exchange rate figures this morning.
He said: “Sterling lost some ground against a firmer euro yesterday, as jitters over the post-Brexit trade negotiations continued, and the lack of any pushback on the recent EUR strength from the ECB gave bulls the green light to take the currency higher.
“The aforementioned trade talks will remain in focus today, ahead of Sunday’s ‘deadline’.”
Currency Strategist at Western Union, George Vessey also commented on the latest Brexit negotiations.
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Mr Vessey said he believed GBP could “sink” by up to 10 percent if a deal is not struck between the UK and the EU.
He explained: “The face-to-face meeting between Boris Johnson and President Ursula von der Leyen failed to break the Brexit deadlock, which has weakened the pound, but the leaders agreed to extend negotiations until Sunday.
“The UK and EU are expected to conclude trade talks this Sunday and if an accord isn’t reached then both sides could agree to walk away without a deal.
“Should this occur, businesses and consumers will be hit by additional costs and disruption in 2021 as tariffs and quotas could be imposed on trade with the UK’s biggest trading partner.
“The value of the British Pound could sink up to 10 percent with €1.05 and $1.25, versus EUR and USD respectively, on the radar.”
He added: “Volatility gauges have soared over recent weeks as traders anticipate more turbulent times for sterling are on the horizon.
“The three biggest obstacles to a deal remain: fishing, governance, and fair competition rules for businesses.”
The currency expert also said the UK economy only grew by 0.4 percent in October, a drop of 0.7 percent compared with September.
The news saw the pound “slip” even lower into decline yesterday morning.
Mr Vessey warned that the impact of the pandemic and a no deal Brexit could see sterling depreciate in the short term.
“The pace of the economic recovery is slowing in the UK and economists forecast even more economic damage given the second national lockdown was imposed to control the pandemic, shuttered businesses in some areas once again.
“The UK economy remains just shy of eight percent lower compered to pre-pandemic levels and despite increasing hopes that vaccine developments will help accelerate growth in 2021, ongoing restrictions and Brexit threaten to disrupt.
“Should a no-deal Brexit play out, the negative consequences on the UK economy in the short term could exacerbate the negative impacts of the COVID-19 crisis, and sterling is expected to depreciate sharply.”
So what does all this mean for your holidays and travel money?
Post Office Travel is currently offering a rate of €1.0555 over £400, €1.0710 for over £500 or €1.0765 for over £1,000.
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