What next for Sterling Euro exchange rates?

Pound to Euro Forecast - Leadership Contest Drives GBP/EUR Rate Lower

Pound to Euro forecast: The Pound to Euro exchange rate has been struggling under the increased uncertainty arising from Brexit. This issue has been the biggest driver of the Sterling Euro exchange rate for the last 2 and a half years, and this doesn’t look like it will be changing soon either.

The pain for those buying Euros with Pounds looks set to continue, with the strength and weakness of Sterling being directly linked to how the market views the UK Government’s performance.

Today we will see the release UK Inflation data and tomorrow we will find out Retail Sales figures which will provide us with further insight into just how the UK economy is performing. Yesterday’s UK Unemployment data did suggest perhaps the UK labour market is not quite as strong as many had predicted.

For clients buying Euros the Inflation data and Retail Sales figures could present a short term opportunity which might be well worth capitalising on. With Brexit being the main driver for the Sterling Euro exchange rate, it looks set to reap further misery for anyone holding the Pound. Those looking to convert Pounds to Euros should, I believe, be adopting a more defensive position.

Further uncertainty in Theresa May’s Government could see the Pound under pressure and struggling to retain form. Whilst the prospect of a UK interest rate hike next month could present opportunities, we would not be expecting a major rise in the value of Sterling since this news is largely priced in.

It is not completely priced in however, since there is a mixed chance of an interest rate hike at the next decision, potentially around 60-75%. However, the enthusiasm that would find itself behind the Pound if the Bank of England do raise rates seems limited since political concerns are the main factor affecting Sterling Euro rates, these seem unlikely to be resolved quickly.

I expect GBPEUR to be trading within a range of 1.11-1.13 for the rest of this week. If you have a position to discuss please get in touch with me directly here.