The EUR has found support against Sterling this week, as fears grow regarding the UK’s upcoming Brexit and what deal will be in place following the triggering of Article 50.
Despite a fairly upbeat budget on Wednesday by new Chancellor Philip Hammond the EUR continued its run against the Pound, hitting a high of 1.1441 this morning.
This move has provided an excellent opportunity for EUR sellers, who may have been concerned that the Pound was gaining a foothold in the market following a positive move for Sterling only a couple of weeks ago. Despite this improvement I am still wary about assuming the current trend will continue, as the EUR itself is suffering against almost every other major currency, in particular the USD.
UK Prime Minister Theresa May has stuck stringently by her deadline of this month to trigger the bill but this was thrown into some doubt following recent reports that the House of Lords made their first major amendment.
EUR/USD rates are trading around 1.06, some of the lowest levels in over 10 years. This proves that investor confidence in the single market is low and as such any positive developments regarding Brexit could boost Sterling and the EUR recent gains could be quickly eliminated.
With key elections in France, Germany and the Netherlands and support for far right parties in each of these countries, it is clear that all is not well inside in the EU. As with the UK’s unexpected decision to leave the EU has proved, along with the appointment of President Trump, the expected result does not always come to fruition and it is clear that some people are searching for change.
Any uprising across Europe is likely to sap investor confidence in the single currency further and the current rates against the Pound in particular, could look extremely attractive in months to come.
This view is even more poignant when you consider recent developments in Greece, who once again are coming under the spotlight due to fears they simply cannot service their ever growing debt repayments and as such they may have no choice but to leave the EU further down the line, news which would likely send shockwaves through the market.
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