In today’s pound to euro forecast James Lovick discusses the recent rise in the GBP/EUR rate. The pound has rallied to a 5 month high against the euro creating a good buy opportunity for those looking to purchase euros. Much of the recent strength continues to stem from the optimism that a Brexit deal will be reached and that progress continues to be made.
Brexit latest news: Irish border issue still unresolved
There are some risks associated with these final stages though and whilst the pound is trading at better levels the issue of the Irish border continues to give both sides a headache in trying to find a solution. It has been reported that a number of Cabinet ministers are seeking to have an exit clause in any withdrawal agreement, but this has not been received well by the Irish.
The lack of agreement on this major issue could still force a no deal Brexit scenario, which although might be looking less likely at this point in time still cannot be ruled out. If the Brexit negotiations stop for any reason in these coming weeks or if for example the emergency EU summit in November does not take place then the pound is likely to slide versus the euro. We should know by the end of this week whether the EU summit will be taking place or not and there should be pound to euro volatility on the back of that.
Italian Budget concerns are causing to euro weakness
It’s not just a more buoyant pound that has helped to lift sterling higher but also a weaker euro. The European Commission rejected Italy’s Budget plans yesterday and has asked for them to be reviewed and updated by 13th November. Italy has been very forceful with the EU Commission to try and deliver on promises that were made during an election campaign but which are at odds with EU spending guidelines. It does leave yet another period of uncertainty for euro exchange rates as this latest issue gives concern in the markets especially considering the amount of debt.
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