Support on the continent for the UK during the Brexit negotiations has proven the fuel for a strong GBP EUR exchange rate advance today.
Helped by political uncertainty in Germany, the Pound Sterling Euro pairing has climbed 0.7% during today’s session to trend around 1.1277.
Pound (GBP) Exchange Rates Strengthen as German Business Groups Call for UK to Keep EU Membership Benefits
A group of leading German businesspeople have joined together to form an alliance dubbed the New Deal for Britain, which is calling for the EU to grant Britain more concessions in the Brexit negotiations.
The group, which includes three former presidents of the Federation of German Industry, aims to lobby European governments in an attempt to secure concessions for the UK, especially with regards to immigration.
New Deal for Britain, which also includes economists among its ranks, is worried that Brexit will be damaging for the EU and ultimately wants to persuade the UK not to leave.
The group could undermine the EU’s attempt to present a unified, immovable face at negotiations, allowing the UK to carve out better terms for its withdrawal.
Hope that this could increase the odds of a good deal for the UK has driven the Pound significantly higher today, helped by weakness in the Euro.
Euro (EUR) Tumbles against Pound Sterling as German Coalition Talks Collapse
German Chancellor Angela Merkel has been left in a precarious position today after talks with rival parties in an attempt to form a coalition government have collapsed.
Talks ended when the Free Democratic Party (FDP) withdrew from negotiations, following an inability on all sides to agree on issues such as immigration, the environment and tax.
Merkel’s Christian Democratic Union (CDU) and its sister Bavarian party the Christian Social Union (CSU) was attempting to create a coalition with the FDP and the Green Party, after Germany’s other main party, the Social Democratic Party (SDP), expressed no interest in forming another grand coalition with Merkel and her allies.
Talks have been ongoing since the elections in September saw the CDU/CSU and SDP lose a significant number of seats, with far-right party Alternative for Germany (AfD) claiming 94 seats – the first time a far-right party has ever claimed spaces in the Bundestag.
Pound Sterling to Euro Exchange Rate Forecast; Will UK Borrowing Figures Raise Confidence ahead of Wednesday’s Budget?
October borrowing figures are set for release tomorrow and will provide the last look into the state of the UK’s finances before Chancellor Philip Hammond presents his Budget to Parliament on Wednesday.
The deficit is expected to have widened from -£5.3 billion to -£6.6 billion last month, which will give the Chancellor even less room to manoeuvre as he sets out his spending plans.
Also set for release tomorrow are the Confederation of British Industry (CBI) total orders and selling prices data; improvements in these would help lift the Pound on the positive signs for the UK’s manufacturing sector.
There is little on the Eurozone economic calendar tomorrow, which could leave the common currency on sluggish form.