The euro continued to lose value against sterling this week as UK Prime Minister Theresa May stated that she is happy to offer more euros to the EU as a divorce settlement and in fact the figure is now €50bn, €30bn more than her last offer.
Tomorrow (Monday) President of the European Commision Jean Claude Juncker and President of the European Council Donald Tusk will meet with the UK Prime Minister to continue Brexit negotiations. I expect further clarity on the divorce settlement will continue to strengthen the pound which will make buying sterling more expensive with euros.
However a key topic that will be discussed this week which could stop sterling from gaining momentum against the euro is the Irish border. The Republic of Ireland have made it clear they cannot afford for the Irish border to turn into a hard border.
However the UK have made some suggestions but have also stated that resolving the Irish border is impossible until trade negotiations have been discussed and the UK have an understanding of the potential trade deal once they have departed the EU. It appears that Donald Tusk agrees with the UK therefore it might be the case that the Irish border will not be sorted until trade negotiations begin which could cause further losses for client purchasing sterling.
Later this month (12th December), EU ambassadors will meet in Brussels to decide whether trade negotiations can begin early next year. Two days later at the EU summit, that decision will be announced. Unfortunately for euro sellers buying sterling, I expect the pound to continue to make gains against the euro as I expect they will allow trade negotiations to begin.
Some of my clients do not realise that for people converting a foreign currency into sterling you are still receiving a ‘Brexit discount’. For example on a €200,000 conversion into sterling last week compared to Pre Brexit, you would received an additional £25,000!
Many of my clients until we discuss there requirements don’t realise they have many options available to them. For example if you are purchasing a property in the UK and are waiting for your foreign currency to become available, you can secure the exchange rate now and pay later using a forward contract. This contract will not be offered by your own bank.
Its also important to study the other currency that you will be converting. Feel free to email me the currency pair you are converting (EURUSD, EURAUD, EURCHF etc) the reason for your conversion (company invoice, buying a property) and I will email you with my forecast for the currency pair and the process of using our company email@example.com.