GBP/EUR rates have dropped sharply during Tuesdays trading, continuing Sterling’s poor run over recent weeks. GBP/EUR rates have now dropped by almost 15 cents in the past 6 months, with the days of 1.40 now consigned to history. The pair dropped to a low of 1.2734 today, providing those clients selling EUR with the best rates they’ve seen in over a year.
The key question now is whether this trend will continue and if so how far can the EUR go? Whilst the 1.30 barrier has been breached, I think it is too early to assume that this will now provide protection for EUR sellers. The Pound has clearly not performed well but despite this downturn, it would brave to assume all of last year’s good work had been undone in a matter of weeks.
What is a clear is that we are seeing a realignment on GBP/EUR rates and based on the current market conditions, this seems to be settling somewhere between 1.25-1.30. Why we’ve seen such a dramatic change is up for debate but my opinion is based on three key factors. The first is that the UK economic output has slowed over the past couple of months and this in turn has knocked market confidence in Sterling. The second is that we have seen an improvement Inside the Eurozone and this has been echoed in the comments by European Central Bank (ECB) president Mario Draghi, who’s commitment to ensuring the future of the single currency is as strong as ever. Thirdly I am looking at own central banks stance and it is clear the Bank of England (BoE), have changed tact over recent weeks. It seems as though chairman Mark Carney is now actively talking down the Pound, with the likely reasoning being to artificially devalue our currency in order to boost exports. Due to the strength of the Pound last year, we’ve seen a negative knock on effect, particularly in our Manufacturing & Production figures and this what are trying to counter.
I am not expecting a major recovery for the Pound but those clients willing to gamble, if 1.30 does become available again then I would extremely tempted to lock in any short-term GBP/EUR positions.
If you have an upcoming currency requirement and would like to be kept up to date with all the latest market movements, or simply wish to compare our award winning exchange rates with your current provider, then please feel free to contact me on 01494 725 353 and ask one of the reception team for Matt. Alternatively, I can be emailed directly on [email protected]