Boris Johnson has been a colourful figure in many ways, and this is also true of his in influence on sterling in the currency markets. The pound vs Euro exchange rates have never been too steady with Boris around, as was proved when he first came out in favour of Leave back in 2016. How will sterling perform in the weeks ahead with ‘BoJo’ looking likely to be the next UK Prime Minister?
Boris’ refusal to completely rule out a no-deal Brexit is a key factor in the behaviour of sterling with no-deal a key aspect in the market’s assessment of the performance of the British currency. Boris Johnson has proposed various measures if Britain decides to leaves the EU without a deal, with a key aspiration to not rule it out.
This means that, assuming he becomes Conservative leader and the UK PM, which is very likely, sterling could be in for further turbulence. Whilst Boris is not actively seeking a no-deal Brexit alone, and does want to renegotiate with Brussels, the lack of expectation on any lee-way from the EU leads to an increased expectation for a no-deal Brexit on October 31st 2019.
Pound vs Euro forecast: What will help the pound to rise against the Euro?
The news is not all doom and gloom for pound vs Euro rates, the recent weakness on the Euro could still assist those looking to buy Euros.
Mario Draghi, President of the European Central Bank (ECB) hinted yesterday that the Quantitative Easing (QE) program, which weakened the Euro so much in recent years, could be revisited if inflation remained low.
The Bank of England might also offer some support here too. The latest UK interest rate decision is due tomorrow at midday. Any suggestions that UK interest rates might need to be raised in the future could lead to a rise in sterling exchange rates. Although the Bank has not historically been supportive of the uncertainty caused by Brexit, is it likely to view Boris’ approach too favourably.
US Federal Reserve speech could impact EUR/USD rates
To complete the trio of central bank activity, we have the US Federal Reserve speaking tonight. This might well influence movement on EUR/USD exchange rates, which may ‘weigh’ the Euro higher or lower versus the pound.
There is so much going at present to drive pound vs Euro exchange rates as the market remains on tenterhooks to observe clarity on Brexit and central bank activity. For a personal and comprehensive review of your currency plans, please do contact myself, Jonathan, to discuss any currency transfers you might be considering up ahead. You can contact me directly using the form below: