GBP/EUR rates have remained flat during Tuesday’s trading, with the markets seemingly waiting on the next Brexit report before making a major move.
The pair has remained rang bound of late, with Sterling finding plenty of support above 1.10 but not threatening to break through 1.13 against its EUR counterpart.
UK Prime Minister Theresa May has reshuffled her cabinet in the hope of bringing some stability and in turn some confidence back to the markets. However, investors have not reacted particularly positively to this development and whilst the Pound has found a foothold of late, a sustainable increase against the EUR looks unlikely under current market conditions.
The EUR itself has benefited from a prosperous Eurozone economy, which has exceeded expectation at almost every turn. It seems to have been the currency of choice for investors throughout much of 2017 but whether that trend continues over the coming months, is likely to be hinge on how phase two of Brexit negotiations develop.
With so much market focus and emphasis on the UK’s separation from EU neighbours, any positive strides forward in this sphere is likely to benefit Sterling immensely. Brexit has been a weight around its neck for the past 18 months but personally, I feel any resolution in the short-term is highly unlikely.
It is far more conceivable that negotiation’s will continue to stagnate, as they did during the early stages, and this in turn is likely to handicap any sustainable increases for the Pound.
Therefore I would be tempted to remove any risk from the market and lock in any short-term currency exchange before Brexit negotiations resume.
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