GBP/EUR rates have crept up again during early morning trading, with the Pound trading close to its high of 1.1368.
The Pound has seen its value increase against the single currency over recent days, despite UK Prime Minister Theresa May losing her key Brexit vote last week in the House of Commons and only just surviving a vote of no confidence in her leadership.
The Pound is managing to withstand any further losses despite the continuing lack of clarity on Brexit. Euro sellers may be considering the possibility that the single currency has maxed out its potential value against the Pound, under the current market conditions.
If the Euro failed to make any further inroads last week, is unlikely to see its value significantly increase against the Pound unless the UK is left in the unenviable position of exiting the single bloc without a deal in place.
Despite this remaining a potential outcome I do not feel it is the most likely scenario. Despite reports to the contrary regarding political jostling and scaremongering amongst senior politicians, neither the UK nor the EU want to leave on irreversibly bad terms. It will not be economically beneficial for either side and as such, I expect a deal to be struck ahead of the March 29th deadline.
How this deal will be achieved, or the parameters of it are yet to be fully divulged but any deal is likely to help cement Sterling’s position and could help boost its value, which remains marooned around the current levels for the most part, due to the on-going uncertainty surrounding the whole saga.
I would be very tempted to lock in any EUR sell positions ahead of the coming weeks, thus removing the potential risk of a downturn form the current highs. Longer-term I feel the Euro is likely to see its value start to decrease, as an economic slowdown and political uncertainty in many key Eurozone regions, could hamper any advancement for Euro exchange rates.
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