The EUR to GBP exchange rate was lower by 0.40% in early European trading on Thursday as the U.K. and European Union look set to clinch an agreement on Britain’s exit from the bloc. ok set to unveil post-Union trade accord as negotiators worked overnight to finalize a compromise deal.
The agreement would put the finishing touches to a rollercoaster four and a half years since the country voted to leave in David Cameron’s referendum.
The EURGBP rate was trading under the 0.9000 level with support below at the 0.8870 level being the first target.
Boris Johnson to Announce a Brexit Deal
The UK Prime Minister Boris Johnson is planning to announce the outcome of an agreement at 11:00, according to the Sun newspaper.
The latest news will come as a boost to traders after months of swinging headlines regarding a No Deal outcome and a deal. The talks have recently been held up by fishing rights in U.K. waters, but a compromise looks to have been found with Britain’s negotiators offering a compromise in the UK’s take of EU catch in its own waters.
The outline of the deal was said to be agreed on Wednesday and negotiators will now formalize the wording of the agreement before it is presented to the 27 EU countries and the UK Parliament. Parliament will now have little time to analyse the wording ahead of any vote and businesses will only have a week to study the new trade rules.
The end of four and a half years of drama and confusion will be a welcome more for investors and the sterling to euro rate can remove a big area of risk and return to levels that reflect the trade and economics. Sterling was also boosted by news that Canada had also signed a short-term deal to avoid trade tariffs with the U.K. after the previous arrangement between the countries was tied to the EU.
Any Brexit deal announcement could be slightly overshadowed by the ongoing virus lockdowns with much of the nation now under a strict Tier 4 agreement.
Brexit Deal Would Put the Focus Back on the Virus
With Brexit being tied up into year-end, the markets will move their focus back to the virus scenario. Many investors were hoping that the vaccine rollout would lead to the end of lockdowns in Britain in the first half of the year, but ministers are pouring cold water on these hopes. Matt Hancock has warned the newest spread would put that outcome in jeopardy.
The new year will probably start the same way that much of 2020 played out with traders watching virus counts until the winter season ends.
EUR to GBP should see gains on a formal deal announcement and the pair may look to revert back to process nearer the pre-Brexit levels of 2016, where the EURGBP rate traded around the 0.75-8000 range.
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