Pound to Euro Outlook: Will GBP/EUR rise back above 1.10?

Pound to Euro Outlook: Will GBP/EUR rise back above 1.10?

Pound to Euro rate continues to trend low

The pound to euro exchange rates have been trending lower in recent weeks for various reasons, notably Brexit related concerns on the type of Brexit the UK is aiming for. Yesterday, the 6th August, saw GBP/EUR levels hit 1.0815 on the interbank exchange rate. This is almost 2 years to the date of the previous lows, 28th August 2017 where we saw 1.0740. A key question for euro buyers is whether or not the GBP/EUR interbank rate will rise back above 1.10 anytime soon.

It has been noted in various financial commentary around the pound, that whilst there is scope for further weakness if no-deal occurs, there is also a fair degree of potential upside should there be some kind of breakthrough.

Pound to Euro forecast: What could happen to GBP/EUR rates?

Rabobank, A Dutch bank, have highlighted in their 6-month forecasts that no-deal could see GBP/EUR touch parity (1 for 1). Whilst any signs of some kind of deal being struck between the EU and the UK on a future trading relationship could see the levels soar to over 1.20. Their central forecast is of an extension being reached in October, which would take us to January around 1.15.

Of course, no one can tell us exactly what will happen, but we can use our experience from historical behaviour to provide clients with information on what might lie ahead. On the subject of the UK potentially heading for a General Election, sterling is also weaker. We know from previous experience in elections, the pound has usually weakened ahead of the event. This will be a key topic to watch ahead as Boris Johnson and the Conservatives now have a majority of 1.

On the euro side, clients may wish to be aware of the ECB amongst other topics. The European Central Bank is currently predicted to be cutting interest rates at their September meeting. However, any signs that they will deviate from this path, or indeed commit to further easing, could see increased volatility for the euro.

If you are considering buying or selling the pound against the euro, and wish for more information surrounding what lies ahead, please feel free to contact me directly using the form below.