Pound Sterling Mixed vs Euro and Dollar on UK-EU Brexit Reset Deal

May 19, 2025 - Written by Frank Davies

STORY LINK Pound Sterling Mixed vs Euro and Dollar on UK-EU Brexit Reset Deal

The Pound to Euro (GBP/EUR) exchange rate has again been unable to break above the 1.1900 level and failed to take advantage of a UK-EU deal to trade around 1.1875.

Despite initial disappointment, the bank still sees scope for GBP/EUR to break above the 1.1900 level.

Weaker equity markets have also undermined the Pound with the FTSE 100 index 0.6% lower.

The dollar is under pressure in global markets while the Euro has found strong support in global markets.

In this environment, the Pound to Dollar (GBP/USD) exchange rate has surged to 1.3385.

According to Danske Bank; “equity moves do not live in a vacuum - we are also seeing a sharp rise in US Treasury yields and a weaker dollar. The moves are being driven by a combination of budget gridlock in the US and Moody's credit rating downgrade of the US.”

Overnight, a stumbling block on a wide-ranging UK-EU deal was overcome with a UK concession on fishing quotas.


The UK and EU have agreed a 12-year deal on fishing with the current deal extended to 2038. In return there is agreement on relaxing friction on food trade.

The fishing deal has re-ignited a fresh wave of criticism within the UK and sparked fresh concerns that a domestic row will hurt market confidence.

The government has secured a deal on relaxing border controls for UK visitors, but there is no deal at present on youth mobility.

There is likely to be agreement on a defence and security pact.

ING noted the importance of expectations; “It seems here that expectations - especially in the press - have got far ahead of themselves. Now, any failure to agree on deals on food checks at the border or youth mobility will be seen as a big disappointment. That said, we do see the overall closer UK-EU alignment as a sterling positive.”

According to Standard Chartered there will be a net benefit; “Given the EU’s historical reluctance to allow cherry-picking with respect to market access, there is a clear risk that a broader deal takes longer to crystallise or falls well short of UK aspirations.

It added; “However, we think the political will on both sides to improve the trading relationship is stronger than it has been since the 2016 Brexit referendum. The prospect of mutual recognition or regulatory alignment, at least in certain sectors, could significantly reduce non-tariff barriers, providing an economic boost to the UK."

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TAGS: Pound Sterling Forecasts