Factors influencing Pound vs Euro exchange rates

GBPEUR Above 1.15 and Looking for Guidance

Since the middle of September 2017 GBPEUR exchange rates have fluctuated between 1.11 and 1.1370, however one day in January exchange rates broke through 1.14 which provided fantastic opportunity for clients buying euros. On going Brexit negotiations have driven the price of sterling and any positive news has pushed GBPEUR close to 1.13, where as negative news GBPEUR has dropped to the lower 1.11s.

Next week the EU will hold the EU summit on Thursday and Friday and this event has the potential to have a major influence on exchange rates. The focus will be Brexit and investors will carefully watched to see if the EU allow the UK to start the trade negotiations early April. If this is the case I expect GBPEUR to break through the current resistance levels and GBPEUR will reach the 1.14s. However if the EU confirm the UK haven’t met the demands of the EU this could have a devastating impact on the pound and GBPEUR could fall below 1.10.

For clients that are buying or selling the pound, the question you should be asking yourself is how much risk do you want to take? If I had to put my neck on the line, I would say that the pound will finish next week well as the EU will announce that the UK will start trade negotiations early April.

In other news the Eurozone are set to release their latest inflation numbers tomorrow and the consensus is no change from current levels. With the euro gaining considerable strength against the US dollar over the last 12 months, I find it difficult to see how inflation will rise any further. Therefore I actually expect this to be a non event. Nevertheless if inflation rises, it puts another nail in the coffin for the ECB to cut the QE program and therefore you should expect the euro to strengthen.

In regards to the pound, the UK are set to release a host of data next week. To start the week inflation is set to be released Tuesday morning. Inflation is set to be released at 3%, which was the same figure as last month. Furthermore average earnings will be released. Forecasts are suggesting that throughout the year, average wage growth will start to catch the rising inflation, which is good news for Brits and the amount of cash they have in their pockets.

On Thursday the Bank of England are set to deliver their latest interest rate decision. No change is expected, but commentary from the Bank of England in regards to predictions will drive sterling exchange rates. Last month, a hawkish statement was given which improved the pounds value. I would expect more of the same.

If you are reading this website in order to find out information in regards to buying or selling the pound, I can help you achieve the best possible exchange rates whilst keeping you up to date with regular economic information. Common clients I deal with are business owners, high net individuals and people buying or selling property abroad.

Its important to analyse both currencies that you will be trading therefore I would recommend emailing me with the currency pair (GBPUSD, GBPAUD, GBPCHF etc) the reason for your trade (company invoice, buying a property) and I will email you with my forecast and the process of using our company [email protected].