GBPEUR has hit close to a 4 year high today but will it last? The economic challenges ahead for the UK will persist and anyone thinking it will be all plain sailing up to 1.30 or 1.40 would do well to remember just how far the rate has already come and look closely too at the economic conditions surrounding the pound. They are not good which is why sterling is dropping against many other currencies.
The Euro has weakened by over 14% in the last year against sterling as the Euro debt crisis has intensified. With more countries taking a bailout and the ECB (European Central Bank) responding with 3 separate interest rate cuts the future is not good for the Euro. I think that certainly in some form the Euro will remain but that there will soon need to be some major changes in the way the debt crisis is managed. We have already seen Germany prove they can be more accomodating in the way they approach the handling of the debt crisis, which is key to offering a tangible solution to the crisis. But will it be enough to satisfy the markets?
As Italy is grabbing headlines due to the fact it may also need a bailout we could be forgiven for thinking the rate is set to go only one way and I am sure we will continue to see pressure on the Euro. But is well worth remembering the problems the UK is still facing and being aware that sterling could easily plummet in the coming weeks and months. In 2010 we were in a very similar situation on the GBPEUR rate. There was concern over the debt crisis and investors had fled the Euro. The rate stood at 1.2350. By that October however the rate had fallen to 1.12!
This was all due to the fact the economic recovery in the UK was very weak and once progress was amde in Europe, attention turned back to the UK and we saw the market fall.
There is without doubt a fair chance the rate will continue to improve as pressure remains on the Euro, although with no new bad news in the press, it is reasonable to think we could have reached a plateau. Whilst the rate may not drop or crash we could easily see it drop a cent or two as investors take their profits on the favourable movements in the last week. Anyone buying Euros would I am sure be gutted to miss out on these 4 years highs and as we always say it is the greedy that often get their fingers burnt!
Exchange rates move every two seconds and things can quickly and unexpectedly turn. To make sure you do not lose out from a poor rate of exchange by your bank or broker why not speak to us here at gbpeuroforecast.co.uk? Working as currency brokers at one of the UK’s leading foreign exchange companies we can assist with all the information necessary to get you the very best deals. We can make sure you are aware of all the trends and themes on your exchange rate and let you know if it starts to move against you as well as offer the very best rates of exchange.
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