In our latest pound to euro forecast we look at the week ahead for the currency pair. This weekend reports have emerged that UK Prime Minister Theresa May is closer to reaching a deal with the EU than many had first thought. Many media outlets have reported that the PM found herself calling her own Cabinet members in a bid to assure them that she is not preparing a summit at the end of the month before securing political agreement within her party.
Brexit news: Is there an agreement over the Irish border?
European diplomats have responded and stated no agreement has been made in regards to the Irish border. However for clients buying a foreign currency with the pound and in particular the euro, exchange rates have increased throughout this morning’s trading period and pound vs euro exchange rates are now close to a 5 month high.
The news that a Brexit deal is close, is great for clients buying euros. It was only last week the Bank of England stated that a smooth Brexit would likely mean that interest rates would be raised gradually towards 1.5% in the short term. If this was to happen, you would likely see investment reaches British shores and therefore the pound to gain value against the euro.
However over the last 12 months, we have seen that the Brexit negotiations are complex and therefore a deal is never done until a handshake has taken place and both parties sign on the dotted line. What I mean by that is, if we receive commentary from the EU in the upcoming weeks that we are still at the opposite ends of the spectrum in regards to the Irish border I wouldn’t be surprised to see pound sterling rates fall back to lows we were experiencing throughout the third quarter of this year.
All eyes now turn to Theresa May and Emmanuel Macron’s meeting on Friday. With the negotiations appearing to be in the balance, I am expecting a volatile finish to the week for pound vs euro exchange rates. For clients buying euros, proceeding with caution would be my recommendation. I still believe there is time for GBP/EUR rates to fall before a deal is stuck. If you are buying euros short term getting in touch today is wise.
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