Sterling hampered by increasing no-deal Brexit likelihood
The pound to euro exchange rate has been suffering as Brexit uncertainties drag the pound lower, and a ‘not so bad’ point of view keeps the euro supported. It is possible that the pound to euro rate will come under pressure if no-deal appears to be an increasing likelihood which it does seem to be the case so far, as investors struggle to get to grips with what type of Brexit is on offer. The Conservative Party leadership election is a key piece of news, with the final date set for 22nd July, this could be a period of volatility on the market for sterling exchange rates.
Pound to Euro forecast: What could happen?
The pound is in a tricky place with both candidates to be the next UK Prime Minister openly supporting a no-deal, a fear for the currency markets. Sterling has also been dealt a blow by some poor data last week which some commentators believe could be putting the UK on a path to recession. With the Bank of England predicted to have a 40% chance of cutting interest rates by the end of the year, according to the Financial Times, the road and path ahead for the pound does not look straightforward and could easily see it lower.
However, often when the evidence seems to point in just on direction, a simple piece of more positive news can help change the outlook. The results from the leadership elections might well be a trigger, to removing some of the uncertainty and helping sterling to find some support.
How could the Euro drive GBP/EUR exchange rates?
For the euro, a key topic is the possibility for the ECB (European Central Bank) to look to cut interest rates or extend their QE (Quantitative Easing) program. Investors will struggle to extend the euro too much support, with such prospects looming. However, for now that prospect is not immediate and with a change of guard at the ECB due at the end of October, the expectation for change is limited.
GBP/EUR levels are positioned close to the best time all year to sell euros for pounds, and certainly in the last 5/6 months. If you are looking to make a transfer involving buying or selling euros for pounds and wish for some extra information to inform yourself, please do get in touch today to discuss further.