GBP/EUR rates hit a fresh 2 year high last Friday, with the pair breaching 1.29 on the exchange. This move was not anticipated and the EUR immediately found support, which has pushed rates back to their current levels.
With the pair now fluctuating between 1.27-1.28, the key question for investors is whether we will see 1.30 hit by the end of Q1 of this year. Opinions are mixed but personally I feel if we were to see a spike it would certainly not last long and with at least 2 key resistance barriers to break just above 1.29 and then again near 1.30, there is still a lot of protection for the single currency under current economic conditions. These of course, can change quickly and aggressively but as it stands I cannot see GBP/EUR surpassing 1.30 in the short-term.
It is likely the European Central Bank (ECB) will embark on a series of aggressive rounds of Quantitative Easing before long and whilst this may destabilise the EUR initially it is likely to be of benefit in the longer-term. We also need to consider that the Bank Of England (BoE) will not want to see Sterling’s value soar, for fear of alienating the Eurozone (our largest trade partner) even further.
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