Pound-Euro Exchange Rate at 1.17 as Sterling Fights to Keep Uptrend Alive

Pound Sterling has moved back against a key level against the Euro, as bulls fight to keep a multi-month uptrend alive and markets question the ability of the Bank of England to deliver an interest rate cut as soon as January.

It now appears that the Pound is breaking down through the trend line and this would have us suggest the uptrend is ending and the Euro has the opportunity to regain the initiative.

The was lower against all major currencies as markets closed Friday but it still ended the week a fraction higher against the Euro and remains above crucial support levels on the charts, although Sterling's resilience will be tested by several key pieces of economic data over the coming days.  

The Pound-to-Euro exchange rate is set to close the week with a 0.5% gain, as a multi-week rally is kept alive by foreign exchange markets eyeing a stronger 2020 for the UK economy and greatly diminished political and Brexit-related risks on the horizon.

The British Pound remains well supported on global foreign exchange markets after a senior EU politician said the UK and EU could enter a partial trade deal at the year-end if some issues require more time to negotiate. 

The British Pound is trading higher in midweek trade, with strong gains coming against the Japanese Yen, U.S. Dollar and Euro despite a flareup in geopolitical tensions that would typically be associated with declines for the UK currency.

Foreign exchange analysts at Scandinavian lender Danske Bank have told clients they are turning more cautious on the outlook for Pound Sterling, saying the currency is likely to struggle in a market where fears for a 'no deal' Brexit at the end of 2020 remain elevated.

The Pound pared gains over the Euro early in the New Year although it still closed the week higher against the single currency on Friday and some technical analysts have said Sterling could now target levels not seen since shortly after the Brexit referendum.