Can GBP/EUR remain above the 1.15 resistance point?
Sterling has had several catalysts of late causing the Pound to hit an 11 month high against the Euro. We saw impressive retail sales figures, they previously landed at – 0.2%, the general consensus was that the new figures would land at 0.4%. They came in at an impressive 0.8%. Average wage growth also increased coming closer to parity with inflation which is a strong signal of a healthy economy. Unemployment now sits at a 43 yr low.
There was further good news in the form of a transitional deal being all but being sewn up for Brexit. It was announced the UK will now have access to the single market during the transitional period.
Despite this news GBP/EUR only stayed above 1.15 for a small window. GBP/EUR quickly retracted below the 1.15 resistance point as it has done several times over the last 11 months. Yesterday, however we saw GBP/EUR move above 1.15 and remain above 1.15, currently sitting at 1.1560. One of the key factors for this move was the news that the European Central Bank (ECB) could hold off on cutting the Quantitative Easing (QE) program. Inflation worries could stop the cut which caused Euro weakness.
The question is could we see further gains or will GBP/EUR again retreat below 1.15. There are still concerns over Brexit particularly the Irish border deal which does have the potential to weaken the pound. The Syria situation could also cause Sterling weakness. It could be the case however we are now about to experience new buoyancy levels between 1.15-1.20. I will be keeping a close eye on rates over the next week to see if GBP/EUR can remain above 1.15 for a sustained period. If you have a Sterling to Euro requirement it may be wise to consider a large tranche while we sit at current levels.
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