Even for an avid market watcher like myself GBPEUR rates have not been particularly interesting lately! Whilst the ongoing events surrounding Brexit and European politics are exciting the movement on the rates GBPEUR has only been just over 3 cents between the high and the low in 2018. After a period of extended volatility in 2016 and 2017 as the Brexit vote was digested, GBPEUR has found some stability.
More than likely it is to do with the lack of any real news, following the progress of the Brexit withdrawal agreement in December the pound has found a more solid base. Against many other currencies sterling is actually enjoying some of the best rates since the vote 20 months ago. The Euro is benefiting from solid economic growth and a belief the Eurozone had avoided the worst fears over ‘populist’ parties triggering a Brexit or Trump style shift in political direction.
With both currencies performing fairly positively the scope to see a major move out of the ranges we have occupied in 2018 is limited. We need something dramatic to happen to change the political and economic courses on both or either currency. For now the biggest news looks likely to be Brexit, firm talks begin next month but we will probably have until the Autumn for a firm deal to be finalised.
Other key news to move the market will be the Italian election on the 4th March and could possibly see the Euro weaker and break out of the recent ranges. The election sees a number of anti-EU and anti-Euro parties competing for power. Any signs of these parties doing well could upset the Euro, however I don’t expect any major upsets. The Centre-right coalition are leading the polls on 37%, the end result will more than likely be a coalition that struggles to do anything too damaging in the market’s eyes.
If you are buying or selling Euros in the coming weeks pressure is gently building and we could very soon see some big swings on GBPEUR outside of the more familiar ranges. One thing is guaranteed, the rates will not remain where they in these ranges forever. Sooner or later it will break out and if you need to transfer funds buying or selling Euros making the most of this and being prepared for it will be key to getting the most for your money.
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