Pound euro exchange rate plummets on returning fears of a no-deal Brexit

Sterling fell after markets reacted negatively to the news, seeing it as creating an unnecessary obstacle to Brexit negotiations and further heightening uncertainty ahead of Boris Johnson’s promised “get Brexit done” deadline of the 31st January. Paul Hardy, Brexit Director at the global law firm DLA Piper, commented: “Cementing the end of the transition in legislation is a game-changer. It shows this is not a negotiating tactic. Businesses must now expect a limited trade deal in goods with the EU on 1 January 2021, but not in services; or the possibility of no deal at all.”

In UK economic news, October’s ILO Unemployment Rate figure dropped to its lowest level since 1975 today, although this failed to boost the pound to euro exchange rate as Brexit uncertainty has returned to haunt British markets. 

Meanwhile, the euro soared against the weakened pound after the Eurozone’s seasonally-adjusted trade balance beat forecasts and rose from €18.7 billion to €24.5 billion in October. 

Some of the euro’s gains were clipped, however, after the European Central Bank’s Finish policymaker, Olli Rehn, said that the bloc’s inflation continues to fall below targets, increasing the likelihood of further fiscal stimulus from the bank to boost the Eurozone’s flagging economy. 

Euro investors are also awaiting Wednesday’s influential German IFO Business Climate figure for December, with any signs of improvement likely boosting market confidence in the euro as the bloc’s largest economy shows some signs of improvement. 

However, Brexit developments will continue to drive the pound to euro exchange rate this week, with any indications of Boris Johnson’s extension bloc to Brexit jeopardising UK-EU relations being pound-negative. 

source: express.co.uk