Pound to euro exchange rate: Sterling remains 'strong' as Brexit talks hit critical point

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The pound had a strong day yesterday against the euro with its “biggest one-day advance” on the common currency in a few months. Currently, there is a positive risk sentiment across investors which will only be improved once successful compromises and negotiations are made in the latest round of Brexit talks. Today, the pound is currently trading at a rate of 1.1230 against the euro according to Bloomberg at the time of writing.

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This is a massive improvement on yesterday’s rate which saw it at 1.1122.

Sterling has now managed to claw its way back against the euro, even clearing that 1.12 handle barrier.

Michael Brown, Currency Expert at Caxton FX, spoke to Express.co.uk to provide exclusive insight into the current exchange rate.

He said: “Sterling put in a strong performance against the common currency on Monday, rising just shy of one percent and chalking up its biggest one-day advance in a couple of months, as the pound continues to benefit from the positive risk mood sweeping across asset classes.

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Pound to euro exchange rate: Sterling remains 'strong' as Brexit talks hit critical point

Pound to euro exchange rate: Sterling remains ‘strong’ as Brexit talks hit critical point (Image: EXPRESS)

Pound to euro exchange rate: Sterling remains 'strong' as Brexit talks hit critical point

Pound to euro exchange rate: The pound is currently trading at a rate of 1.1230 against the euro (Image: BLOOMBERG)

“Today, with the data calendar barren, attention will centre on the latest round of post-Brexit trade talks, as the clock ticks down to the end of June deadline for extending the transition period.”

Trade negotiators from the UK and the EU will meet for a forth round of post-Brexit negotiations today.

However, despite the positive outlook this could have on sterling, Brussels and Britain are not expected to come to an agreement on how to proceed.

It is not expected that Britain will ask the EU for an extension to the post-Brexit transition period.

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But if a trade deal is not put in place, this could have a devastating impact on UK businesses which are already suffering due to the coronavirus pandemic.

The UK is expecting to have left the EU customs union on December 31, 2020.

George Vessey, a Currency Strategist at Western Union said that more traders are betting on the pound plunges in the future. 

He said: “The currency market’s net short position on the pound has increased for 12 weeks in a row according to weekly positioning data.

Pound to euro exchange rate: Sterling remains 'strong' as Brexit talks hit critical point

Pound to euro exchange rate: This is an improvement on yesterday’s rate which saw it at 1.1122 (Image: GETTY)

“This means more and more traders are holding positions on betting the pound falls in the future compared to positions betting on it rising.

“The last time traders were so bearish on sterling was in the run-up to the general election in December last year, which resulted in the pound flying to $ 1.35 from around $ 1.30 in a just a few days as those positions were unwound.

“The positioning data is taken from the Commodity Futures Trading Commission’s (CFTC) weekly report, which provides a breakdown of the net positions for ‘non-commercial’ (speculative) traders in US futures markets.”

But he added that Brexit UK-EU talks are having a positive impact on sterling.

Pound to euro exchange rate: Sterling remains 'strong' as Brexit talks hit critical point

Currencies (Image: EXPRESS)

“The report is considered an indicator for analysing market sentiment, which appears to disfavour the pound at present.

“However, with net short positions rising, this actually opens the door to greater upside risk for GBP.

“If we see sterling strengthen this week following more optimistic UK-EU trade talks, then an unwinding of these short positions could accelerate sterling’s upward momentum.”


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