EU 'using Northern Ireland to undo Brexit' says Sammy Wilson
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The pound was enjoying a steak of growth against the euro just one month ago amid the positive vaccine rollout, however, since then it has plummeted as Brexit rears its head once again. Rising tensions between the UK and European Union (EU) could “threaten” UK trade, according to one expert.
As a result, traders have begun to sell off sterling.
The pound is currently trading at a rate of 1.1628 against the euro according to Bloomberg at the time of writing.
Despite the recent losses, the exchange rate remains “rangebound”.
Michael Brown, currency expert at Caxton FX, shared his insight into the exchange rate with Express.co.uk.
“Sterling-euro remained rangebound yesterday, with the ECB decision failing to inject any notable volatility into the market, and the cross comfortable to continue marking time just north of the €1.16 handle,” he explained.
“Today’s docket is relatively quiet, meaning that ‘more of the same’ remains likely into the weekend.”
Despite this, George Vessey, UK currency strategist at Western Union Business Solution says some traders are showing concern over the ongoing dispute between the UK and EU over Northern Ireland protocol (NI).
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The trade conversations come ahead of this weekends G7 summit in Cornwall.
Mr Vessey said: “The British pound eventually gave up ground on Wednesday following an increase in tensions regarding post-Brexit UK-EU trade.
“Despite the calmness of currency markets of late, sterling volatility crept higher as a result, and GBP/EUR fell under the €1.16 mark on Thursday morning.”
He continued: “The pound has been overlooking the UK-EU tensions of late, but the recent standoff about the Northern Ireland (NI) protocol ahead of the key G7 summit this week triggered a wave of sterling selling – dragging GBP pairs lower.
“The EU is considering advancing its legal challenge as a result of the UK Government’s unilateral extension of a grace period for goods moving into NI from Britain.
“This could result in tariffs and quotas being imposed, which would harm UK trade and probably cause headwinds for the pound.
“Eyes are on US President Joe Biden in case he weighs in and suggests a UK-US trade deal could be compromised, which would likely weaken the pound further.
“GBP/EUR is on track for its first weekly decline in five weeks after failing to reclaim the €1.17 handle over the past two months.
“The upside traction looks to be tiring, but short-term support lies at the 50- and 100-day moving averages before €1.15.”
For those looking to jet off on holiday in the coming weeks and months, there remains an air of uncertainty.
Whether or not countries will be added to the green list at the next review has not yet been clarified.
Ian Strafford-Taylor, CEO of travel money specialist FairFX advised: “Britons hoping for an overseas break should keep an eye on any announcements and watch the pound closely to make sure they’re getting more bang for their buck by securing the best rates available for their travel money.”
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