GBP/EUR Forecast for Q1 2019

Was the Pound’s Sell-Off “Overdone”?

GBP/EUR Forecast: For clients that are planning GBP/EUR currency transfers throughout 2019, Q1 is going to have a major influence on the exchange rate for the remainder of the year. The ongoing Brexit negotiations are coming to an end and MPs are preparing to debate Theresa May’s Brexit deal the first week they return. Following the debate MPs will have the meaningful vote which is crucial for the Prime Minister and ultimately the strength of the pound.

If Conservative MPs vote in favour of Theresa May’s plan, quite simply I expect GBP/EUR exchange rates to rally, and by the end of Q1 I expect GBP/EUR to be trading in the higher teens (1.16/1.18). The reason I believe GBP/EUR will rally significantly is the uncertainty will be removed meaning businesses do not have to worry about not being able to trade within the EU and I also expect the Bank of England to up growth forecasts and hint towards hiking interest rates towards the back end of the 2019 summer.

However if MPs vote Theresa May’s Brexit plan down, depending on how many votes she loses by I believe will dictate what happens next. If she loses by a handful of votes, I expect she will contact certain MPs directly and try to persuade them to change their minds and another meaningful vote will follow shortly after. Furthermore, if she loses by a significant amount I personally don’t believe she will take the UK out of the EU with a no deal Brexit, therefore I expect her resignation or Jeremy Corbyn will file a motion of no confidence against the Government. Either way both scenarios will cause further uncertainty and therefore I expect the pound to make further losses.

If Theresa May resigns then a leadership contest will follow and I find it difficult to see who will take over as the Conservative Party are so torn between leaving with no deal and a peoples’ vote. In addition if Jeremy Corbyn files a motion of confidence, I’m not convinced the DUP will continue to support the Prime Minister. Both scenarios I expect will push GBP/EUR rates towards 1.05.

If you are buying euros with pounds or selling euros to buy sterling, I would recommend getting in touch to discuss your options. We have contracts available such as limit orders and stop losses which help clients maximise their returns whilst using safety nets so there are no surprises when they eventually secure their currency. For more information feel free to feel the form below and I will give you a call to discuss your own specific requirements.