The pound to euro exchange rate has this week hit 1.1194 on the interbank exchange rate, presenting the best time in 5 months to buy pounds with euros.
Why is the pound weak against the euro?
This is the combination of increasing uncertainties surrounding Brexit, combined with the European outlook not being quite as bad as expected. With the pound likely to struggle in the coming weeks with the Conservative leadership challenge looming, there could be more opportunities for euro sellers.
This week saw some rather worrying data for the UK with economic growth in April showing -0.4%. Whilst put down to a one-off, because of a sharp decline in the automotive sector, it does not bode well for the future. Such news against the backdrop of uncertainty surrounding where Brexit is headed, will only weigh on economic sentiment in the future.
Mixed Brexit views represented in the Conservative leadership contest
The Conservative leadership campaign is capturing many of the headlines and presenting the market with increased reasons for concern. The contest is reflective of the mixed views on Brexit contained within the Tory party and government, the dominance of no-deal as an acceptable policy option is harming the pound.
For the rest of this week there is little fresh UK data, but the political situation will surely increase tensions and the uncertainty for the pound. We have seen more and more concerns relating to the future direction of Brexit and we know this is a tough issue for the market to try and value.
How can the currency markets value the Brexit, when it is not clear what is happening? In such a scenario the pound will find little reason to be being aggressively purchased, clients with a pound to euro trade hoping for the rates to rise quickly and dramatically could be in for further woes.
If you have a pound to euro, or euro to pound transfer, and wish to understand the latest news and trends, please do contact me Jonathan Watson directly. I have worked as a currency broker for close to 10 years and assisted thousands of private clients and businesses to plan and manage their exposure to this notoriously volatile market.