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Pound euro exchange rate has ‘brief rally’ but remains driven by post-Brexit trade talks

The pound to euro exchange rate has remained in a “familiar” range of late largely due to a lack of figures and new stimulus. Post-Brexit trade talks have ground to a halt in recent weeks with the main sticking points being fishing and state aid. The UK has until the end of the year (December 31) to reach a deal with the EU, otherwise, the UK will leave the bloc and trade on similar terms to the US.

He said the euro could shift higher against the dollar which is currently “beleaguered”.

He said: “Despite the uncertain path ahead regarding the EU’s stimulus fund, the euro has remained defiant and looks poised for another shift higher against the beleaguered US Dollar.

“EUR/USD has climbed for nine out of the last 11 trading days and may attempt a run at a new two-month high atop $1.19 this week.

“Stimulus measures by central banks and governments remain critical during this second wave of coronavirus infections.”

Mr Vessey also said that news of successful coronavirus vaccine trials has had a positive impact on financial markets.

“The vaccine news has buoyed risk sentiment in financial markets, but the reality is that economies are still going to suffer in the short-term as a result of stringent social distancing measures,” he added.

He continued: “The news that the EU’s €750billion stimulus package is being blocked by Hungary and Poland, is therefore significant.

“The aim of the new regulation was to ensure compliance with the principles of a rule of law and to enable infringements to be punished, which the two countries spoke out against.”

“Nevertheless, from a technical standpoint, the euro could still make further gains this week.

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