Throughout October many of the leading banks and economists were predicting GBPEUR exchange rates would reach parity throughout 2017. A month down the line GBPEUR exchange rates have improved and broke through 1.18, which just shows how quick exchange rates can change.
For the remainder of the year, there is a good chance that the euro will continue to devalue and therefore GBPEUR will increase. My prediction is that GBPEUR will be above 1.20 before Christmas and below are my reasons why.
This weekend the Italian public will vote to give power to the Government and take power away from the Senate. Prime Minister Matteo Renzi has stated he will resign if the Government are not given more power. If he loses the referendum I expect the euro will devalue.
On the 8th December President of the European Central Mario Draghi is set to make his decisions on the quantitative easing program. ECB officials have warned that ultra loose policy is needed therefore I wouldn’t be surprised to see Mario Draghi extend the Q.E program, which theoretically means further euro weakness.
The last major event that could have an impact on euro exchange rates is the US interest rate decision. Many economists are predicting a hike from 0.5% to 0.75% and therefore investors will flock to the dollar for profit on their investments. EURUSD is the most traded currency which again leads me to think this event could be euro negative.
However it’s important to take into consideration that Brexit still looms of the UK and any news that the UK will leave the single market from the Supreme Court ruling could lead to major sterling weakness.
If you are trading another currency pair that I have not covered, feel free to email me with the pair (GBPUSD, GBPAUD) the reason for the transfer (company invoice, property purchase) the timescales you are working to and I will respond with my forecast and the process of converting currency. My direct email address is email@example.com and I look forward to receiving your email.
If you are buying or selling euros in the upcoming weeks and are looking to achieve competitive rates of exchange whilst receiving regular economic information feel free to call the trading floor on 0044 1494 787478 and ask for Dayle Littlejohn. Alternatively drop me an email.