Will Sterling Euro Exchange Rates Stabilise?

Recent exchange rate movement for sterling euro has been exceptionally volatile and with Greece’s next bailout tranche due in October, and UK GDP figures in a couple of days it remains difficult to accurately asses where the currency pair will end up.

The huge surge in July was based on the fear the Euro would tear itself apart, however calming words from Mario Draghi and the bond buying program have helped the Euro fight back from a four year low.  In fact early last week it touched a two and a half month high against the pound, but couldn’t sustain this after more fears surrounding Spanish banks emerged and German business sentiment hit a two year low.  To my mind recent events have not solved the key problem for Europe which is a lack of growth, however it has bought EU leaders sometime.  However this is likely to be tested again in the run up to Greece’s next bailout tranche so may provide another good spike for anyone looking to buy euros.

I would not expect sterling to be able to maintain too much pressure against the single currency for a prolonged period as there is still the threat of QE hanging over the pound (the latest round is due to run out in November).  To this end I expect further volatility in the first couple of weeks in October before seeing the pound slip back as we near the end of the year in contrast to last year.  If you were banking on an exchange rate of 1.30 as opposed to 1.20 then I would be inclined to cash in at 1.25+ rather than gambling on an improvement as I feel there is more risk to the downside for the pound if the immediate threat to the Euro can be removed (ie the issue of the Greek bailout).

If you do need to buy or sell euros, or any major currency transaction for that matter then please feel free to contact  Colm at Foreign Currency Direct by e-mailing [email protected] and quote poundeuro – there is no cost or obligation to the information with the only proviso being that would be happy to quote on your currency exchange and see if our award winning rates can show you a significant saving!