Over the last 2 weeks the pound to euro rate has been declining with mid market exchange rates dropping from 1.1775 to 1.1450 at the time of writing this article. To put this into monetary value a £200,000 transfer now generates clients €6,500 less. Even though the pound is declining I personally believe now is a good time to buy euros as rates could fall further in the upcoming weeks.
Leadership contest to rock pound to euro rate
UK Prime Minister Theresa May announced yesterday that she will discuss a timetable for the leadership race after MPs vote on her Brexit deal early next month. With cross party talks close to being over, it looks very unlikely that MPs will support Theresa May therefore a leadership contest looks like a likely event in the upcoming months as I believe Theresa May’s position will become untenable. If the PM resigns, the likelihood is that a Brexiteer will take over and therefore the UK may approach the EU to renegotiate the withdrawal agreement.
The problem is that the EU have made it clear that the withdrawal talks will not be reopened and if the UK or EU are not prepared to back down the UK are heading for a crash out Brexit. At the start of the year when the chances of crashing out of the EU were high, pound to euro exchange rates were close to 1.10. If Theresa May resigns the chances of crashing out increases and therefore I think we will head to the lows we saw at the beginning of the year.
UK economic data props up the pound
The only saving grace for GBP/EUR rates at present is that UK economic data has impressed over the last 10 trading days. GDP for the quarter increased to 0.5% from 0.2%, manufacturing and industrial production numbers exceeded expectation and Unemployment is at a record low of 3.8%. Data for today light, all eyes should now turn to the European Elections next week, Brexit developments as they unfold and UK inflation Wednesday morning. If you would like further information in regards to pound to euro exchange rates feel free to fill in the form below and I will personally give you a call.