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Pound Sterling-Euro Rate at 1.11 after von der Leyen says sees "a Path to an Agreement Now"

- von der Leyen raises hopes for a deal
- GBP/EUR hits 1.11
- But agreement on fisheries a sticking point

von der Leyen

Above: EU Commission President Ursula von der Leyen addresses the EU Parliament on Wednesday. Photo by Etienne Ansotte. Image © European Union, 2020. Source: EC - Audiovisual Service.

  • GBP/EUR spot rate at time of publication: 1.1115
  • Bank transfer rate (indicative guide): 1.0826-1.0904
  • FX specialist providers (indicative guide): 1.0973-1.1037
  • More information on FX specialist rates here

The Pound-to-Euro exchange rate has extended gains to 1.1111 - or 0.90 EUR/GBP - during the mid-week session, amidst growing anticipation that the EU and UK will announce a deal on post-Brexit relations in the near-future.

Sterling rallied across the board after EU Commission President Ursula von der Leyen told the EU Parliament that the negotiating teams continue to make progress and that MEPs would need to match the ambition of negotiators by striving to pass any deal before year-end. 

"The good news is that we have found a way forward on most issues," she said.

Pound Sterling extended the previous day's gains on the comments, going higher against all major currencies.

However, whether or not there will be a deal on Wednesday, or indeed this week, is still unclear.

"I cannot tell you whether there will be a deal or not. But I can tell you there is a path to an agreement now. The path may be narrow but it is there. It is therefore our responsibility to continue trying," said von der Leyen.

The EU Commission President confirmed two issues remain outstanding: level playing field & fisheries.

On the level playing field, von der Leyen said, "our aim is simply to ensure fair competition in our own market."

On fisheries she said discussion is still very difficult.

However, von der Leyen told European lawmakers that she would require them to go the extra distance in order to get any deal ratified ahead of the year-end deadline.

"I know that if we do get there that I can count on you to ensure a good outcome. We must walk these last miles in the same shoes," said von der Leyen.

GBPEUR chart

Above: The Pound-Euro rate appears to be stuck around the 1.10, perhaps only a concrete development in Brexit talks will prompt a more decisive directional move.

The Pound rallied on Tuesday and into Wednesday after reports emerged that the UK Parliament was being prepared to operate during the Christmas recess period and a prominent BBC journalist said expectations were growing amongst MPs for imminent news of a deal.

"Big buzz in the last hour among Tory MPs that the UK is heading towards a Brexit deal with the EU. Eurosceptics being reassured they will be happy," said the BBC's Nicholas Watt.

The report has however not been backed up by further confirmation that a deal was imminent, and Sterling's gains will likely be tempered by caution until any final confirmation from senior politicians emerges.

"Sterling was the top-performing G10 currency for the second day running as optimism continued to rise that a deal might be reached in the coming days," says Jim Reid, an economist at Deutsche Bank.

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