The pound was “treading water” on Friday and over the weekend after post-Brexit trade talks remained in a stalemate. The coronavirus pandemic has remained the focus over recent months, but fears of leaving the EU with no trade deal in place has soured risk sentiment. Today’s Brexit video conference and the easing of lockdown could boost sterling if talks are successful.
The pound is currently trading at a rate of 1.1093 according to Bloomberg at the time of writing.
This is below Friday’s trading rate which was 1.140.
Michael Brown, currency expert at Caxton FX spoke to Express.co.uk to share his exclusive insight on the current exchange rate.
He said: “Sterling traded within a tight range against the euro on Friday, treading water for most of the day, as market participants awaited today’s high-level conference call between UK and EU leaders aimed at kickstarting the presently stalled post-Brexit trade talks.
Pound to euro exchange rate: GBP remains stable as Boris prepares for Brexit talks today
Pound to euro exchange rate: The coronavirus pandemic has remained the focus over recent months
“No-deal risk does not yet appear priced into GBP, hence indications that a deal is some way away should exert pressure on sterling.”
Joshua Mahony, Senior Market Analyst at IG said US President Donald Trump’s promise to avoid a second lockdown has also helped stabilise markets.
He said: “Stocks are heading higher as the uncertainty around a second wave provides a volatile market environment.
“With Trump promising to avoid a second lockdown, the coming months could be key for his hopes of re-election.
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“Markets appear to have stabilised after Thursday’s crash in global equities, with traders attempting to figure out whether this is finally the beginning of the second major selloff.
“We appear to be shifting from a phase where everyone looks towards the reopening as a cause for optimism, to one where we begin to refocus on Covid case numbers with trepidation.
“The gains we are seeing today highlight the fact that a second wave still remains far from guaranteed, yet we are certainly likely to see volatility and market sensitivity pick up in the coming weeks as Covid cases roll in.
“A rise in Covid cases in US states such as Florida, Texas, California, Nevada, and North Carolina provides a potential warning sign for nations hoping to loosen the restrictions imposed to bring down the spread of the virus.
Pound to euro exchange rate: The pound is currently trading at 1.1093 against the euro
“While a rise in cases could raise fears of another lockdown, Mnuchin and Trump have made it very clear that they are not willing to suffer another economic slump.
“The potential for Trump to allow a second wave to go unchecked in the name of preserving economic growth provides yet another key reason to doubt his re-election chances come November.
“Pricing around the US election has swung heavily towards Joe Biden, and the potential of an unimpeded surge in Coronavirus deaths will do little to boost optimism for Trumps re-election.
“From a market perspective, the outcome of November’s election has huge consequences, with the market outperformance under his leadership providing clues as to how people view the impact of his ‘America First’ approach.”
But Mr Mahoney also thinks Trump could potentially ignore a second wave if it means the US economy remains in stable condition.
He added: “However, while Trump’s focus on the economy has been great for US stock markets over the years, it could also be his downfall if he chooses to ignore a second wave.
“Fears of a second wave have hit crude markets heavily, with the potential for another phase of lockdowns pointing towards another hit to global demand.
“The expectation of a tick shaped recovery is heavily dependent upon avoiding a second wave, yet the instability seen in energy markets highlights the fear that we could see the tightening demand-supply dynamic widen yet again.
“The relative outperformance in Asian stocks overnight highlights the feeling that a potential second wave would be more likely in the US or Europe, with many Asian countries already quite used to adjusting policy to quell any outbreaks.
“The impressive performance for Asia-focused stocks such as Standard Chartered and Burberry highlights how many believe the region will be a safer bet for investors compared with the more unpredictable Western markets.”