Pound Sterling Jumps Half a Percent against Euro as Trade Talks Rumoured to Catch Progress on Fishing

The British Pound was one of the better performing major currencies on Tuesday amidst a broad based improvement in investor sentiment and rumours of a potential breakthrough in trade negations between the EU and the UK.

The Pound-to-Euro rate steadied last week but the technical outlook remains bearish on the charts and the fundamental pressure cooker that otherwise stains Sterling's prospects has gone into overdrive and threatens to produce big trouble in Little Britain during the days and weeks ahead.

The Pound-to-Euro rate recovered from earlier steep losses on Thursday but is in danger of unravelling again over the coming before falling to March lows in subsequent weeks if the EUR/USD rate continues to star and Sterling remains on its back foot against the Dollar. 

The British Pound was seen under pressure against a resurgent Euro on Wednesday, courtesy of improving sentiment towards the Eurozone's single currency and developments in the UK's sovereign bond market that saw bond yields fall into negative territory.

Decisive steps towards a joined-up European response to the economic carnage wrought by the coronacrisis were made on Monday, resulting in improved investor sentiment towards European assets and the Euro exchange rate complex.

The Pound-to-Euro rate closed its worst week since the height of panic over the coronavirus on Friday but could attempt to stabilise in the coming days as it nears support on the charts, although analyst commentary suggests this will only be a short-lived period respite ahead another big leg lower.

This graph suggests the UK is now testing a greater proportion of its population than any other country in the given comparison, a positive development for an under-fire British Pound.

The Pound-Euro rate is roadblocked on the charts and vulnerable to a correction over a multi-week horizon, technical analysts say, and this week will also be guided by the market response to the government's lockdown exit plan and official data that will reveal the cost of the coronavirus for the economy in the first quarter.