The EUR to GBP rate was lower in early Tuesday trading after a rally to 0.9200 fizzled out. The pair is now trading at 0.9885 as the market pauses following another day of drama. Boris Johnson is said to be seeking an 11th hour Brexit deal with a fishing concession, but the hopes of a deal are slim.
The day was one of high drama after the UK. government shut the country down over a new strain of the virus, which led to other European countries placing a travel ban on the country.
Traders Buy Sterling as UK Set to Climb Down Over Fishing Rights
The latest Brexit reports suggested that the UK would offer the EU a larger slice of fishing quotas in exchange for a compromise on other sticking points. The EUR to GBP is stuck in a very familiar range as the talks have swung back and forth.
Another deadline passed on Sunday which was set by the EU Parliament. The late stage of the talks now means that there is very little time for politicians to pass an agreement and this would suggest that a No Deal trading scenario could come into effect for a short period in 2021. Yesterday’s border and supply chain chaos could be a dry run for ministers to consider the effects on the economy of further delays.
Virus Spread Leads to Flight Bans and Border Delays
Yesterday saw panic and chaos after the UK went into further lockdown and more than 40 countries banned all flights to and from Britain. This also led to a 48 hour French haulage ban and fears over food shortages in the UK.
Prime Minister Johnson told Downing Street reporters that he had spoken with French President Macron and both sides wanted to fix the issues ” as fast as possible”. The French government are looking at a policy of mass testing truck drivers but even this is set to cause friction with border crossings.
A spokesperson for Sainsbury’s said that all of its Christmas dinner products were “already in the country,” but added, “If nothing changes, we will start to see gaps over the coming days on lettuce, some salad leaves, cauliflowers, broccoli and citrus fruit”.
The Brexit talks have been stuck on the issues of fishing and regulations, but traders are hoping this can be resolved in the next few days with the Prime Minister previously saying that ministers could be recalled for Christmas voting on an agreement. Britain was looking for a three-year period while the EU wanted seven years. It’s been said that the two sides could agree on five years but this may anger fishermen in the UK.
The Scottish first minister, Nicola Sturgeon, had asked Boris Johnson for a further extension to the Brexit talks but this was ruled out. The EUR to GBP rate could retreat to 0.8900 if the border issues cool this week, while a deal could see a larger move lower.