GBPEUR has been stuck in a tight range trading in a band of 3 cents in the last month. Over the last 3 months the range is 4 cents so there really has not been anything too dramatic occurring on the rate, compared to some of the more volatile sudden moves since the Brexit vote. Whilst we have begun to hit some fresh highs when it reached 1.16, I expect we will now remain in this more familiar ranges for much of June.
Despite the market being presented with Euro weakness lately over the Italian political uncertainty, the pound also performed badly as falling Inflation data removed the urgency for the Bank of England to be looking at any interest rate rise. We are seeing mixed signals and the market has not really been able to establish any fresh news to warrant any specific and significant jump outside of the ranges.
The possibility of the UK hiking rates was one such factor but this now appears highly unlikely in 2018. Sterling is better supported because of this longer-term potential and the progress being made on Brexit. However, with there being so much more to still finalise on Brexit, the pound is likely to remain on the weaker side.
Important news this morning is UK Retail Sales and then tomorrow’s GDP data as well. Overall, there appear to be more reasons to be hopeful of a longer-term rise in the value of the pound as we get final clarification on Brexit and European political fears increase. We might need to wait until the Autumn of end of 2018 for this to really manifest on exchange rates however.
June sees plenty to potentially move the market with the EU Summit and interest rate decisions from both the Bank of England and the European Central Bank. Despite this, I still feel we will remain within these 1.13-1.15 ranges which have now become so familiar.
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