Pound Sterling forecast: Sterling has continued where it left off last week, with further gains against all the major currencies. The Pound had its strongest week of the year, making impressive gains against the Euro in particular.
GBP/EUR rates reached a two year high
GBP/EUR rates hit a fresh two year high, moving through 1.17, providing those clients holding the Pound with some much needed respite after months of stagnation.
The catalyst for this upturn was largely down to a reduced chance of a no-deal Brexit and a delay to the planned exit date of March 29th. With the current deadline fast approaching, action and not words is certainly required.
I will remain cautiously optimistic at this point, due to the fact this is not the first time we have heard that progress is being made. However, despite the previous false dawn, it does finally seem as though UK Prime Minister is making headway in her talks with the EU regarding a softening of their current stance on the Irish backstop. This is key to persuading MPs to vote in favour of her Brexit deal, when the next “meaningful” vote takes place on March 12th.
The Euro did find some support above 1.17 but only managed minimal gains and with the current GBP/EUR levels trading just under this threshold, any further progress this week is likely to drive Sterling value back up.
Those selling Euros will be disappointed at last week’s developments but may in time still look back on the current levels as offering fair value, especially when they consider the history on the GBP/EUR pair.
Any major realignment for the single currency is likely to dependent on a no-deal Brexit and with this scenario now looking less likely, I do not anticipate a move back towards the post-referendum highs.
As such, Euro sellers may wish to consider their positions ahead of what could be a period of relative downturn, assuming that Brexit talks do finally yield a positive outcome.
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