Brexit continues to be the key factor on Sterling value and I would expect current levels to remain until voting on Theresa May’s current Brexit deal begins which is due to take place before 12th March, although it is more than likely to take place on the day itself.
Unless the PM gains concessions from Brussels on the Irish border I think her Brexit deal will fail and will not be voted through by MPs. If this is the case a vote will be held the following day on whether or not Parliament will be willing to leave the EU without a deal.
I think this is unlikely and if that is the case we will then see a third vote the following day. This will concern whether or not there should be an extension to the March 29th deadline.
I think an extension will be the likely outcome and this could cause a further rise in the Pound’s value despite this being factored somewhat into current levels on GBP/EUR.
The PM could have something agreed behind closed doors with Jean-Claude Junker which could see an eleventh hour deal, but I feel this is less likely than an extension to Article 50. I believe the probability of a no deal has now dropped substantially.
Is now the best time to sell Euros?
If you are sitting on Euros with the hope of a large fall in the Pound I would be wary. You are essentially relying on a no deal scenario which now seems far less likely. Morgan Stanley stated recently there is less than 5% chance of a no deal Brexit scenario occurring and Parliament have been vocal their intention is to make sure this does not occur. There is the potential for movement in your favour as negotiations intensify, but I do not think there will be huge gains. The risk is if news filters through that an agreement has been reached on the Irish border we could see significant gains for the Pound which could prove costly.
If you are Euro seller and your funds are not yet available a forward contact should be considered. This essentially allows you to book your currency at current market levels with a 10% deposit and then specify a date to pay the balance.
If you would like to discuss anything you have read in this Pound to Euro forecast, or would like more information on GBP/EUR transfers, please use the form below to ask a question, I’ll respond personally to discuss your query.