Brexit questions hold back the Pound
The Pound to Euro exchange rate has been rising as we saw more confidence over the Brexit last week, only for it to fall down again as fresh Brexit uncertainties weigh on the pound. Brexit is going to remain the hot topic of discussion for perhaps the next 5-10 years, and in my opinion it will continue to be the main driver on the pound for many years to come.
Sterling has some important hurdles to overcome now as we await further developments on Brexit. Unfortunately for sterling holders, unless we something very much unexpected occur, the Euro will continue to remain very strong against the weaker pound.
Will we drop below 1.10?
GBPEUR is just above 1.10 but I can easily see a drop below this in the coming weeks and months as we reach crucial crunch points on Brexit. The Pound is likely to continue to react to the headlines and with all the various sides only digging their heels in deeper, the potential for a no-deal is increasing.
Dominic Raab, the Brexit Secretary has confirmed that the chance of a no-deal has now increased from 20% to 25% chance, underscoring the increased uncertainty for the Pound. There are still many different outcomes and it appears that the Pound is only going to struggle.
The 2017 low was 1.075 and this could very easily be retested again. Economic data for the UK has been mixed with GDP, Gross Domestic Product data showing 0.4% growth. This is not going to set the world on fire and to really see a big boost for Sterling, we need to see some good news on Brexit.
GBPEUR Forecast – Conclusion
GBPEUR will I feel trend in the 1.08-1.13 range for September with a series of key events able to potentially move the rates. This includes next Thursday 13th where we have a UK Bank of England decision and also a European Central Bank decision too.
The 18th-20th could be key with the latest EU Summit and then on the 30th September we have the Conservative Party Conference which might highlight the problems of infighting within the Tory party.
Only a real surprise twist of events will help the pound so it looks like Sterling will remain the weaker of the two currencies.
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