In today’s Pound to Euro forecast we look at the recent GBP to EUR strength amidst a week full of meetings between British and EU leaders fine tuning the terms of the Brexit withdrawal agreement. Rates for GBP to EUR have risen over 1.15 again in the hope that a new agreement on the legal terms of the Irish backstop can be reached.
British politics is seeing a very interesting time at present and this week has seen a number of defections from both the Labour Party and Conservative Party to an independent group.
This is important as it changes the balance in the House of Commons and could make it harder for the minority Government in power to push through key votes in Parliament. As such a general election does move one step closer if there remains a stalemate in the House of Commons and it is unable to push its business through. Rates for GBP to EUR are likely to see a volatile few weeks ahead at this important Brexit juncture and with all the political uncertainties that go with it.
A meaningful vote on Brexit is expected to take place next Wednesday and should determine where GBP to EUR rates head next. This is the next milestone ahead of the 29th March withdrawal date.
Pound to Euro forecast: Will Euro exchange rates weaken further?
Euro exchange rates don’t have the brightest outlook with Italy in recession and a very gloomy outlook for the German auto sector. This morning sees the release of Purchasing Managers Index numbers for the manufacturing and services sector which should give some projection as to the future health of the Eurozone economy.
EU inflation data tomorrow may also influence EUR to GBP rates and has been a major concern for the EU in recent years. The European Central Bank (ECB) have been battling with weak inflation for a sustained period and today’s ECB minutes from the January meeting may offer some clues as to the central bank’s thinking. The markets had been expecting to see the first interest rate hike towards the end of 2019, but with an economic slowdown both in the EU and globally then this in my view is starting to look distinctly unlikely and could result in Euro weakness.
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