Buying Euros – GBP EUR Weakness on No Deal Prospect

Brexit continues to dictate GBP/EUR

As Brexit continues to dominate the headlines with the prospect of a no deal scenario, the Pound continues to trade at the lower levels against the Euro. The British Government published 28 notices yesterday giving guidance to the public and business on the prospect of a no deal outcome. Despite these notices the Government remains positive that a deal is within reach and is the most likely outcome. There was a Brexit cabinet meeting yesterday of which its sole purpose was to discuss the implications of a no deal Brexit.

What was interesting was that the Bank of England Governor Mark Carney was also present at some of the meeting and was snuck in through the back door. Mark Carney has grabbed the headlines this morning after stating that British house prices could crash and a drop by as much as 33% in a worst case scenario. The stark warning from the Governor is not welcome news for the Pound as we reach these final stages in the negotiations. With no guarantees that a deal will be reached, we could see rates for GBP EUR under considerable pressure. Any political news over the weekend is likely to see the Pound react strongly. For the time being there is an an excellent window of opportunity for anyone looking to sell Euros for Pounds.

The Bank of England meanwhile have held interest rates at 0.75% following a unanimous vote yesterday. With all nine members voting to keep rates steady it would appear that any further interest rate increases are some way off and the Pound is unlikely to see an positive movement from this area. Interest rate increases are normally positive for the currency concerned but it is likely to be well into 2019 before any hike is seen and once Brexit is out of the way.

Eurozone inflation is released on Monday which will be closely monitored by the European Central Bank at time when the Central Bank is looking to conclude its substantial asset purchasing scheme. However the economic data will most likely be overshadowed by Brexit developments.

To find out more about the factors likely to impact Sterling rates, or to ask a question about an upcoming transfer you can use the form below. I’ll be happy to get in touch personally and discuss your queries.