The Pound to Euro exchange rate has come under fresh pressure this week owing to the uncertainty of the UK Government and political woes. Whilst the UK leaning towards a softer Brexit is good news, the weakness in Mrs May’s government is holding back the pound.
The Euro has also been rising against many currencies this week following an upbeat assessment from Mario Draghi, President of the ECB (European Central Bank). In a statement earlier this week Mario highlighted how he felt the extensive stimulus used was having an effect and that the Eurozone was now on the right trajectory.
This shift in tone from the ECB who at their last meeting caused Euro weakness by backtracking on their more previous positive outlook, could see GBPEUR dropping down to the 1.12’s or maybe 1.11’s. To see a move even lower will take some fresh political uncertainty which cannot be ruled out.
We were told the Leave vote would not win and we were told David Cameron would not resign. We were then told there would be no snap election so can we really assume that Theresa May will be able to carry on?
Her resignation or a vote of no confidence is now looking increasingly likely and would surely see GBPEUR levels slipping below 1.10, testing the 1.07 market her hit last year in August. Expectations for the pound to keep rising if these matters do resolve themselves are limited since the infighting in the Tory party does not seem like it will move quickly away.
We now have a very busy period with Donald Trump meeting Mrs May and the Queen plus the latest news on Brexit neogtiations. We are expecting a White Paper on Brexit very soon which will further outline the detail on the Government’s position, this could shed some further light on GBPEUR and might help stem the losses.
The biggest risk in the currency market is to do nothing so if you wish to run through and discuss any strategy relating to a GBPEUR exchange and what happens next, please contact me directly. You can email me at email@example.com.