Pound to Euro forecast: Brexit Limbo and Political Uncertainty is hurting Sterling

GBPEUR: Sterling Loses Ground Ahead of Rates, Election

Pound Sterling forecast

The forecast for the Pound to Euro rate looks a little dreary at the moment. The Pound has lost ground against the majority of major currencies following confirmation that Theresa May is set to leave her position as UK Prime Minister on 7th June.

Political uncertainty historically weakens the currency. On this occasion I think the PM’s departure was already largely factored into the Pound to Euro exchange rate. The market moves on rumour as well as fact. Some may deem her departure as a positive as this could mean the next leader may have a different stance on Brexit or prove more successful in getting a deal agreed with Brussels.

Brexit Party gain traction following European elections

Nigel Farage’s Brexit party performed very well in the European elections which does add further uncertainty to the political situation. The Brexit party is a relatively new, unknown entity, but has gained a good deal of traction against usual stalwarts who suffered heavy losses in the voting.

Pound to Euro forecast

The Euro has it’s own troubles with huge debts being mounted up by Italy and the threat on the automotive industry from tariffs that could be implemented by the Trump administration. Against the US Dollar the Euro is close to a two year low. This is concerning considering the Pound is still showing losses against the Euro.

With both Brexit and political limbo it does not bode well for Sterling, I am surprised we have not seen further losses for the Pound. Sterling seems to be proving resilient without justification. The GBP/EUR rate of 1.13 is currently holding up as a resistance point.

With Theresa May leaving, the chances of a no deal Brexit now seem to have a higher probability. I think if this becomes more prominent in the press we could see further falls for the Pound. Without clarity on the political front and Brexit I am afraid Sterling will remain fragile against the majority of major currencies.

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