GBP/EUR rates have settled around 1.13, after some key developments in the UK Government in recent days.
The resignations of chief Brexit negotiator David Davis late on Sunday evening and then the former Foreign Secretary Boris Johnson on Monday, have been well publicised.
Whilst Davis’s announcement did little to shake Sterling’s foundations, Boris Johnson decision to step down caused the markets to panic, and a quick-fire sell-off of Sterling positions followed. This helped boost EUR’s value, although in truth it struggled to make any significant impact below 1.13 against Sterling.
GBP/EUR have largely remained range bound between 1.13-1.14 over recent weeks, with investors unsure which direction the pair will take next. Whilst the Pound is being handicapped by the on-going Brexit saga and a division in the UK Government over the current strategy, the Euro has still been unable to make any significant inroads.
The Eurozone economy itself has also come off the boil over recent weeks, with the European Central Bank (ECB) unable to commit to a date when they will finally tie up their long and expansive monetary policy programme.
For the time being at least, it seems as though the EUR has hit somewhat of a glass ceiling around the current levels against GBP.
Of course, any further key resignations inside the UK government, or negative reports regarding the on-going Brexit negotiations with Brussels could change this.
However, it may be that if we were going to see any further aggressive drops in value for the Pound, they would have already occurred after this week’s key developments. If you’d like information on these and other factors that are likely to impact Sterling exchange rates feel free to get in touch here.