French Europe Minister Amélie de Montchalin commented: “Just because [Prime Minister] Boris Johnson wants an agreement at any cost doesn’t mean we will sign a bad deal for the French, under pressure of blackmail or the timetable.” Sterling slipped against both the euro and the US dollar as investors speculated over whether a UK-EU trade deal will be possible before the end of the transition period.
Today also saw concerns raised by reports that the UK could renege Brexit arrangements for Northern Ireland, which sparked off fears that trade deals with both the EU and the US could be compromised.
Ireland’s Ambassador to the EU Bobby McDonagh said: “If [the UK Government] were to renege on its legal obligations under Brexit withdrawal agreement to protect Good Friday agreement, it would have many consequences.”
“One would be the end of any prospect of a UK-US trade deal.”
While the pound was pressured lower the euro derived support from February’s German IFO business climate report, which beat forecasts and rose from 96 to 96.1, while business expectations also rose to 93.4.
Carsten Brzeski, Chief Economist at ING Germany, was downbeat in his assessment however, warning that weakening Chinese demand, due to the nation’s ongoing coronavirus epidemic, “will leave its marks on the [German] economy and could accentuate troubles in the automotive industry”.
Looking ahead, we could see the pound to euro exchange rate edge higher tomorrow if Germany’s final growth report for the fourth-quarter undershoots expectations.
Brexit developments will also continue to drive the GBP/EUR exchange rate this week.