Since October 2017 we have seen GBP/EUR exchange rates move by less than 4 cents from the high to low point despite Brexit tensions, global trade wars, the potential of interest rate hikes for the U.K and possible tapering of QE in the Eurozone.
It seems that no matter what economic or political issues are thrown at the pairing is seems extremely comfortable where it is but just when may we see it finally break out?
One of the potential larger market movers will once again be U.K interest rates. Currently, according to research there is now a 50% chance of an interest rate hike for the U.K in August and a 90% chance that we will now see a hike by the end of the year.
An interest rate hike is generally seen as a positive for the currency concerned and with currency markets moving on speculation as well as fact, even the mere hype of a rate increase can give the Pound a boost.
I personally feel that U.K economic data is on the increase and the golden sunshine will only help to improve that. Retail Sales should improve, especially if we continue to see England perform in the world cup, and there does seem to be a positive feel on economic conditions at present.
The one banana skin that could pull the rug from under the Pound’s feet may be Brexit or political issues, we are still seeing a lot of people contesting how Brexit negotiations are moving along and there are still fairly high tensions politically in the U.K that may blow up at any time.
My personal feeling is that if we are to break out of this current range then it will be towards he higher end and not to drop lower, as long as we continue to avoid any major political issues or problems with Brexit negotiations.
I feel that GBP/EUR should be closer to the 1.17/1.18 mark and should Mark Carney put a nod to rate hikes looking likely in his speech tomorrow then we may see the rate start to improve.
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