In today’s GBP/EUR forecast we discuss the headline event of this week, the UK Parliament’s meaningful vote on Mrs May’s Brexit EU Withdrawal Bill, has been postponed. The news saw the pound sharply sold off as traders bet that the uncertainty would persist and there is now an increased likelihood of worse news to come.
Sterling to Euro rates hit a 4 month low nudging the 1.10 mark. GBP/EUR opened at 1.1180 before diving to 1.1050 by lunchtime, with a further fall to 1.1011 by mid-afternoon as the House of Commons questioned May on her actions.
Mrs May will now travel to Europe to meet with various leaders in a last-ditch attempt to salvage her deal, mainly to try and get concessions on the Irish backstop issue which has so far been a key issue preventing her from finalising support within her Party.
GBP/EUR Forecast: Plenty more news to come for the pound
Pound to Euro exchange rates will receive plenty more news this week as this situation unfolds, there is an EU Summit on Thursday where Brexit is not directly on the agenda, but may well be discussed.
Sterling looks set to continue to struggle against this negative backdrop of news, we also have a series of economic releases in the UK and the Eurozone to move rates. This morning is the latest UK Unemployment figures, one of the better pieces of news surrounding the UK economy.
Eurozone events that could affect the GBP/EUR forecast
Thursday sees the latest ECB, European Central Bank interest rate decision where market attention will be very much on the ECB and whether or not they will finally stop their Quantitative Easing (QE) program. With plenty of fresh political risks from Spain, Italy and France across the Eurozone, there is a risk of the ECB being more cautious.
Economic news too in the Eurozone has not been ideal, with Germany slowing and many concerned Italy could be headed for a recession. This could all lead to greater concerns for the ECB, which might prevent them from advancing their monetary plans. This would see the Euro weaker should it be the case.
Brexit news the main driver for GBP/EUR rates
The performance of GBP/EUR rates this week and ahead will be largely determined by the next direction on Brexit. There is now an increased possibility of either Mrs May being forced out by her Party or Parliament, an increased chance of a second referendum and also improved prospect of a no-deal.
Sterling will react heavily to the news so clients looking to buy Euros with sterling should be closely monitoring the Brexit and developing situations. It does look likely to be sterling which suffers the most but with the market now appearing to be pricing in worst case scenarios, the potential for a sudden spike upwards, should Theresa May manage to find a way forward, cannot be ruled out.
This is a major week on GBP/EUR exchange rates, the fallout from which may well spread into next week or 2019. The market will eagerly await further news on what to expect with a strong possibility that sterling might at any time move sharply according to a sudden headline or piece of news.
Clients with any GBP/EUR money transfers, to buy or sell might who wish to be kept informed of the latest news and receive updates on this ever-changing market, can please contact me below. I’ll be happy to discuss my GBP/EUR forecast in more detail.