GBPEUR: Will the Pound Bounce Back This Week?

Pound to Dollar Rate Dragged Lower by UK Vaccine Concerns

Sterling exchange rates took a huge knock over the course of trading last week, losing significant ground against most major currencies with a large decline over the course of the trading week. The GBPEUR lost over 4 cents and GBPUSD over 5 cents during the trading week, touching 1.07 and 1.27 as an interbank rate of exchange against the two currencies respectively.

Much of the losses were put down to Brexit concerns, and Sterling made huge losses as the week continued due to an increased chance of a no deal Brexit.

Reports came out last week that not only had Brexit talks been showing little progression but the U.K had also made a move to look to alter various parts of the withdrawal agreement, which is a move that has not been taken positively by senior EU officials and has led to severe negativity both from the EU and for sterling exchange rates.

Where sterling exchange rates head next is a tough call to make, on one hand investors seem concerned about what will happen with the EU relationship but on the other U.K economic data has been fairly strong. On the data front it is important to remember that despite posting reasonably strong data this next few months has the potential for that strong economic data to drop away.

Furlough Scheme Comes to an End

We are seeing the furlough scheme begin to unwind and there is also no more of the ‘eat out to help out’ scheme which had led to millions of extra meals being purchased in pubs and restaurants throughout August on Mondays, Tuesdays and Wednesdays.

It was reported that this scheme had done wonders for the hospitality industry as consumers took up Chancellor Rishi Sunak’s offer to get out and about and have a meal which the Government would pay 50% of up to the value of £10.

Clearly the U.K embraced it and many restaurants called the scheme a saviour and some have even continued the lower price food off their own back since due to the success the eat out to help out scheme had.

However, entering September and not only has eat out to help out gone but also the furlough scheme, helping to keeping millions of workers on the payroll has also started to unwind.

There is a worry that the true unemployment figure will be significantly worse than what the stats are currently showing and that the U.K has merely been papering over the cracks by keeping many in employment that otherwise would have been let go.

With all of this in mind the next month or two could be significantly testing for the pound, although I do think a lot of focus on the performance of sterling exchange rates will depend on whether or not a Brexit deal is agreed with the EU by 15th October.

This is a date that Boris Johnson has now suggested will be the final date that he will allow talks to continue until, citing that individuals and business’s will need ample time t prepare for the outcome and going past this date would not allow for people and business leader to prepare adequately, therefore no progress by 15th October would likely lead to a no deal Brexit.

Historically a no deal Brexit or even a heightened chance of it has ultimately led to weakness for the GBPEUR rate, hence why we saw the losses last week. All eyes will now be on what happens next in this saga and any news will likely impact Sterling exchange rates significantly.

Currency Exchange to Carry Out in the Coming Weeks and Months?

If you have a currency exchange to carry out involving GBPEUR or GBPUSD the pound against any major currency in the days, weeks or months ahead, then it would be well worth you contacting us here at pound sterling forecast so that we can be of assistance to you .

You may already be set up with a international payments provider, but I would like to think that our level of service and may add great value to you along with our competitive exchange rates too.

By taking a couple of moment to fill in the form below it could potentially lead to more for your money in terms of assistance with the timing of your transfer from your dedicated account manager.