The EUR has lost ground against both Sterling and the USD, during the early part of the trading week.
GBP/EUR rates hit a high of 1.1355, whilst EUR/USD rates have retracted back towards 1.23.
The reason for this downturn has been attributed to leaked report, which indicated that the EU Parliament is set to push for Britain to have “privileged” single market access, giving the UK more flexibility and thus softening our upcoming exit. It seems as though Brussels are keen to accelerate the UK’s exit, perhaps by offering improved terms.
Whilst these reports have not been substantiated, they seem to have filtered through to currency markets and provided enough substance, to act as a potential catalyst for yesterday’s downturn.
If true they would also go against the EU’s chief Brexit negotiator Michel Barnier, who has fought against any type of open access for Britain once it has removed itself from the EU bloc.
The markets seem to be increasingly driven off of rumours rather than facts and as such, they are proving increasingly difficult to dissect.
The Eurozone economy has outperformed almost every expectation over the past 18 months and whilst growth forecasts remain positive, any change in momentum regarding Brexit negotiations, or a softening of the media’s depiction of the UK’s economic downfall, could weaken the single currencies position further.
Looking ahead and this morning’s UK Unemployment figures have the propensity to be a key market mover. With Unemployment predicted to remain unchanged at 4.3%, expect additional volatility on GBP/EUR rates should the official figure be released outside of this remit.
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