Will GBPEUR hit 1.20 soon?

GBP EUR Exchange Rate: Weekly Review July 16  

Wobbles yesterday for the pound have proved short lived but remain. Fears over the damage to the UK economy from pulling out of the EU hurt sterling but it has ebbed back up. I think very soon in the coming weeks and months a 1.20 trading level is realistic but a few things need to happen.

Sterling needs to avoid further problems including:

Europe – Worries and uncertainty over the UK’s role in the EU evidenced by Tory rebellions undermines confidence in sterling. If Cameron can lead where many others have failed and unite the party over Europe the pound will find strength.

Economy – The pound has found support as growth returns to the UK. Various revisions by the ONS (Office of National Statistics) of last year’s data questions whether we were even in a double dip recession last year. The latest data by the NIESR (National Institute of Economic & Social Research) showed 0.8% growth in the UK for the last 3 month period. This is better news and has helped the pound to find favour. The economic data needs to keep improving and showing growth to see further gains for the pound.

Eurozone Worries – We need some negative news to cause a Euro sell off. Quite frankly this could come at anytime! I have already mentioned how I felt the Euro has taken a turn for the worse in recent weeks as investors previous confidence rubs off. Worse than expected economic data plus looser economic policy is all serving to turn the screw on the euro and means we could easily see rates tick up a bit higher for euro buyers.

Are you selling euros? Do not be too disgruntled if you missed selling euros at 1.15, the close to two year low earlier this year. The changes in market sentiment means a return to such levels is unlikely. Any deal below 1.20 is in my opinion very good value selling Euros based on prices form last year and historical rates.

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