Who will be the next Conservative Leader?
We probably know the answer to this question, our Marmite politician Boris Johnson. The pound to euro exchange rates are volatile, under pressure from the uncertainty of the Tory leadership contest which is now in its final stage. His position to become PM further strengthened as Michael Gove and Sajid Javid became the latest contenders to be eliminated. Only two candidates remain with Jeremy Hunt battling to beat Boris Johnson to number 10.
Whilst Boris is clearly the favourite, there is uncertainty as to where he stands on Brexit and a lack of clarity on what lies ahead next for Brexit is weighing on market sentiment.
No-deal prospects have seen sterling lower as ‘BoJo’ looks likely to take number 10, making the possibility of no-deal more likely. However, there is a growing frustration relating to the lack of clarity on Boris’ actual plans. Some might suggest he doesn’t really have any and will rely on his charisma and charm to try to improve the current deal, something the EU have said is not possible. Sterling exchange rates against the euro are struggling to hold their nerve in the 1.12s, we could quite easily see a rise or fall a couple of cents depending on how the market anticipates the news.
Will the Pound to Euro exchange rates rise on the news of a new leader?
It is very difficult to be too positive because we know Boris represents no-deal to a degree. However, the certainty presented to the market of having a new PM, could potentially lift the pound as well. It is unclear how the market will react, but I am more in the negative reaction camp, simply because I don’t think Boris will generate enough credibility in the markets.
I suspect the market will be skeptical of his plans and remain concerned that by leaving no-deal on the table, Boris could leave the door open to a general election which then opens a whole new world of possibilities. Pound to euro exchange rates could lose ground on such uncertainty, although the EU would probably be forced to grant an extension, as finalising an election in that time could be a challenge. Interestingly, the pound might also then actually rise, since the delay makes no-deal less likely in the shorter-term.
As you can see, there are all manners of possibility still remaining on Brexit, with no option being firmly off the table. Brexit could still be cancelled through a second referendum and a hard exit on 31st October could also take place.
With so much to consider, any clients buying or selling euros should be making careful plans and not trying to put all their eggs in one basket of expectation. If you have a transfer to consider I would be most happy to have a chat with you regarding the latest news and trends, plus to assist in the development of any relevant strategy that might guide you to a better price.
If you would like to learn more on factors affecting GBP/EUR rates or have an upcoming currency transfer, please feel free to contact me directly using the form below. I look forward to hearing from you.