The pound to euro exchange rate has made gains as we head towards the end of the trading week as it seems the euro has fallen out of favour with investors and the dollar seems to be the choice of the day. With euro vs US dollar being the biggest traded currency pairing in the world a movement in this rate can impact the currencies against other majors, and EUR/USD has seen the most in terms of volatility today.
Factors affecting the GBP/EUR exchange rate
German data showed a slight slow down in growth in the largest economy attached to the euro and members of the Federal Reserve had signified that the anticipated 0.5% cut in interest rates at the end of the month may only be 0.25% which has benefited the dollar ever so slightly.
Throw UK news into the mix and the UK is due to announce a new Prime Minister early next week, which may not have a huge impact on the currency markets initially, but it does mean that there is the potential for a little progress with Brexit again.
Italian debt crisis: How much of a problem is this for the Euro?
In terms of politics there are still major issues within Italy and most notably Italian politics, where there are fears of a Government crisis and possibly there is a chance that an election is on the horizon.
Political uncertainty can be damaging for a currency and it is no secret that Italy has a number of political and economic problems, should they increase then it is likely that we may see this start to weigh on the euro.
Next week it will be of great interest to see if the UK firstly has Boris Johnson as a Prime Minister and secondly if the pound receives a ‘Boris Bounce’ or if he continues to champion the fact he is willing to carry out a ‘no deal’ Brexit which could weaken the pound.
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