Pound to euro rate forecast: Will rates rise or fall on the European elections and Brexit?

ECB interest rates and Brexit update

The pound to euro rate has slipped as expectations over a deal between Labour and the Conservatives faded and focus returned to the difficulties that may lie ahead in the longer term.

Clients expecting a quick return to some of the higher levels buying euros will need to see sterling finding some form, or indeed the euro weakening. The euro has been weaker already presenting some opportunity, but could now struggle as investors await the European elections.

The European elections are also a key topic for clients looking to buy or sell the pound as investors await key news which will present the market with the information required to trigger the important movements. Personally, I think Brexit is not going to be solved anytime soon and we could well see sterling on the weaker side as a result.

Uncertainty over Theresa May’s position rocks pound to euro rate

Theresa May’s position is looking increasingly vulnerable and this might well see the pound losing ground as investors await further news to trigger movements. Last week, when it looked like Theresa May might be losing her position, the pound to euro (GBP/EUR) rate did fall into the lower 1.15s.

My concern now, is that the pound could struggle further in the weeks and months ahead as investors await further clarification over whether or not Mrs May’s position is going to be in jeopardy.

European elections could see rise of far-right parties, how could this impact the pound to euro rate?

On the European side of things, the European election could easily see the euro weaken as there is an expectation that the euro will lose ground if there is a good showing from more extreme parties. The euro is already under pressure owing to economic concerns as the trade wars threaten the possibility of the European economy being weaker in the future.

The pound is unlikely to perform overly well from the European elections either since we have the Brexit Party doing very well in the polls, which could unsettle the pound as it just underlines the fractured nature of UK politics.

All in all, the next few weeks look to be a very volatile time in the currency markets for pound to euro exchange rates. If you have a transfer to consider and wish to get the latest news and updates on the market, please do not hesitate to get in touch to discuss further.