The pound benefited from a boost this weekend as rumours emerged of a Brexit breakthrough.
It is believed Prime Minister Theresa May has secured a Brexit deal to keep the UK in the customs union after it leaves the EU.
Consequently, the pound to euro exchange rate is enjoying a healthy start to the week – but experts warn it may not last.
The rate could be vulnerable if the UK’s services PMI (Purchasing Managers’ Index) shows a decline in output.
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The pound is currently trading at €1.141 against the euro, according to Bloomberg.
Laura Parsons, currency analyst at TorFX, spoke to Express.co.uk regarding the latest exchange rate figures.
“Rumours that PM Theresa May has secured a secret Brexit deal that would keep the UK in the customs union after leaving the EU boosted the GBP/EUR exchange rate over the weekend.
“The pound is currently trading at around €1.14, but it could come under pressure later today if the UK’s services PMI shows a decline in output.”
The pound began to climb at the end of last week after British Conservative Party politician Dominic Raab announced the deadline for a Brexit deal to be negotiated was 21 November.
Raab said, in a letter to MPs made public on Wednesday night, the end of the negotiations with the EU is “firmly in sight.”
Pound to euro exchange rate: GBP ‘boosted’ thanks to Theresa May’s new ‘secret Brexit deal’ (Image: Getty Images)
He wrote: “The end is now firmly in sight and, while obstacles remain, it cannot be beyond us to navigate them.”
Parsons said on Friday: “In a swift reversal of fortunes, Sterling rocketed higher on Thursday thanks to the latest Brexit reports.
“A relatively upbeat policy statement from the Bank of England (BoE) also shored up the pound, with the GBP/EUR exchange rate jumping back above €1.140.
“As long as optimism remains high the pound could hold gains heading into the weekend.”
The pound’s improvement was long-awaited after it hit a two-month low early last week.
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Pound to euro exchange rate: The pound is currently trading at €1.141 against the euro (Image: Bloomberg)
Pound to euro exchange rate: The exchange rate is enjoying a healthy start to the week (Image: Getty Images)
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Experts have warned this new optimistic wave may not last for long if the Brexit negotiation deadline is not met by the government.
Hamish Muress, currency analyst at OFX, said: “We will have to wait to see if this date can be stuck to and if anything leading up to November 21 may cause more market jitters.”
British Prime Minister Theresa May has planned for the UK to leave the EU on March 29 next year.
Looking forward to today, PMI data will be in the spotlight, with the high-impact UK services reading due out in the morning.
Current forecasts are for a slight rise in the pace of sector activity, which could be all that’s needed to boost Sterling.