Could sterling be set for further losses against the euro?

GBP EUR Higher After European Central Bank Rates

Pound to euro rate after breakdown in cross-party talks

The pound to euro rate continues to be largely dictated by Brexit. We recently witnessed GBP/EUR reach as high as the mid 1.17s, only around half a cent away from a two year high. The pound’s gains were based on the fact that Theresa May was trying to put together a deal that would be accepted by the Labour Party. The deal would mean the UK would have access to the customs union until the next general election at which point Labour could campaign to remain in the EU. I was convinced the spike would not continue as I had little faith in the talks prevailing.

Talks have broken down and as a result we have seen sterling on a predominantly negative trend. Economic data releases seem to have lost their usual impact, we recently saw figures released on unemployment which showed some of the best levels in over a decade. Despite this the euro continued to strengthen following news that talks between May and Corbyn had not been going well.

Pound to euro forecast ahead of European elections

With the European elections due tomorrow, we could see further losses for sterling. Farage’s Brexit party are growing in popularity according to polls and should they defeat the Tories and Labour in the election this would result in further political uncertainty and could cause the pound to weaken.

I have little faith May’s deal will go through at the fourth attempt and again you can expect sterling to lose value. If the deal does fail to go through it would also mount pressure on May to step down.

I am of the opinion sterling will remain fragile until we have firm news on Brexit and at present we seem a long way from seeing any significant progress. It is also important to consider that the euro is strengthening against sterling but suffering heavy losses against other major currencies. EUR/USD for example is now close to a two year low.

If you are interested in buying euros or pounds and would like to learn more about these factors and how they can influence your currency transfer, you can contact me directly using the form blow.