Why is the Euro still strong against the Pound?

GBP EUR Exchange Rate: Weekly Review April 9th

The Pound Euro interbank exchange rate has remained extremely volatile over the course of the trading week so far, with a movement of 1.15% from high to low so far this morning alone.

With Central Banks around the world stepping in with facilities to try and prop up faltering stock markets and with many businesses around the world now in lockdown for the foreseeable future it is no great surprise that we are seeing such market movements but I guess the real question for those of you with Euros to buy or sell is where will the market head next?

The honest answer at present is that we don’t know, and neither will anyone out there in such an unprecedented time, but it does appear that the Pound is susceptible to losses and very fragile considering the usual backbone that it holds. The Pound has lost almost 8% against the Euro in march alone, and a lot of this loss can be put down to the weakness in the stock market. In recent times when the FTSE has been on fine form and rising the Pound has followed suit, however when the FTSE is falling the Pound tends to do the same.

One of the arguments for this is that the FTSE is injected full of foreign money, so when you have a large volume of overseas investors selling off their positions and moving their money back out of the Pound you then tend to see a decrease in demand for the currency and therefore you witness a decline in its value.

If we throw into the mix that the U.K has a large financial sector which may be open to the elements what appears to be an inevitable financial crisis and the Brexit uncertainty that now faces the U.K now that most of Europe is on a lockdown then the outlook for Sterling does not appear that great. No doubt the words ‘no deal Brexit’ may start to hit the headlines again as we move towards June (where we have a chance to extend the deadline of 31st December) and these words have generally led to Sterling weakness.

All in all it does appear that the Pound may be in for a slightly rockier ride than other major currencies so it is one to watch extremely closely if you are holding on to Euros that you are waiting to bring back into Pounds.

There are various options you have at your disposal should you find yourself in this position, if you would like to discuss those options in more detail or you would like to have a chat about the current market and what else is due out that may impact the value of a large currency exchange then please feel free to fill in the form below and we will be happy to speak with you in more detail.

If you’d like to discuss these factors and how they could impact your currency exchange, you can reach me directly using the form below.