GBP to EUR Outlook: Pound Making Gains Against EUR

GBPEUR Sees a Sharp Rebound with ECB Stimulus Plans

We have seen gains for Sterling against the Euro in the last 24hrs, GBP to EUR breaching 1.12. This shows some impressive gains since the low of the Corona period of 1.05.

There are many Euro sellers who were holding out in the hope of parity and now are kicking themselves they did not sell at 1.05. Considering it was only around a month ago GBP to EUR struck 1.2072 selling in the 1.12s should not be frowned upon.

Is There Potential for Sterling to Have Further Falls?

The answer is yes, although I would be surprised to see parity. Sterling is particularly susceptible during times of global economic uncertainty. The UK’s imports far outweigh its exports and we also have complete lack of clarity regarding Brexit trade deals. There is also now the very strong possibility that negotiations will now be delayed well into 2021.

Even without Corona it still could be the case that the pound could be considered fragile. The Bank of England have slashed interest rates and have also committed to using Quantitative Easing (QE). QE is essentially pumping money into an economy in order to stimulate growth. The money is often borrowed long term from banks. The European Central Bank has also committed to some quite bold moves in terms of monetary policy change. Usually these kind of monetary policy changes would have a huge impact on the currency market but in these unprecedented times and the fear of global economic recession monetary policy changes are to be expected and are easing investor concerns.

The question is has Sterling bottomed out against the Euro already when we struck 1.05. The future is uncertain, but with precautionary measures in place from Boris it could be the case that the worst is over.

If you are selling euros it is obviously frustrating that you missed out on 1.05, but as mentioned earlier selling in the 1.12s should not be considered a bad rate considering pre-corona we were at 1.20.

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