Why is the pound so low against the euro

There are many reasons to why GBPEUR exchange rates are fluctuating in the low teens at present. However I believe there are three core reasons.

  1.  Over the last 4 months the euro has been gaining off a weak US dollar. EURUSD exchange rates have increased 14 cents over the last 4 months due to President Donald Trumps administration failing to pass new legislation and that the President is under investigation because of his ties with Russia. Couple this with Core inflation falling, I am not surprised the dollar is devaluing and a report this morning from Lloyds is expecting further flows from the US to hit EU shores.
  2. Mario Draghi (President of the European Central Bank) has insinuated the Central Bank will begin discussing tapering the QE program in the Autumn. The Presidents reasoning is that growth throughout Europe is steady.
  3. The UK’s decision to exit the EU has caused the pound to drop like a stone and at present negotiations appear to not be going anywhere. Both parties cannot come to an agreement about the divorce settlement or EU citizens rights.

Looking further ahead, if the USD continues to devalue and the UK cannot come to an agreement with the EU, I expect GBPEUR could break through 1.10 and trade below 1.10 for a period. However with rates so low at the moment I cant help but think GBPEUR exchange rates are close to bottoming out.

If you are trading another currency pair that I have not covered, feel free to email me with the pair (GBPUSD, GBPAUD) the reason for the transfer (company invoice, property purchase) the timescales you are working to and I will respond with my forecast and the process of converting currency. My direct email address is [email protected] and I look forward to receiving your email.

If you are buying or selling euros in the upcoming weeks and are looking to achieve competitive rates of exchange whilst receiving regular economic information feel free to email me with your requirements or call the trading floor on 0044 1494 787478 and ask for Dayle Littlejohn.