GBP/EUR rates have dipped again during Friday’s trading, with the single currency finding plenty of support around 1.14.
The EUR climbed to 1.1338 at it’s high, assisted by worse than expected UK Construction data released this morning.
Whilst the Pound has made positive inroads of late, it seems that the recent spikes are unsustainable.
Brexit talks are entering a key phase and this is likely to put pressure on the EUR and as such this will help to support the EUR value around the current levels.
With the global markets seemingly improving , there is also an argument to say that investors risk appetite will improve alongside it. Usually this means than they will move funds from the safer haven currencies such as the USD & CHF, into more risky and potentially higher yielding currencies.
This in turn could boost the single currencies value further. against the USD
Whilst the currency markets are extremely difficult to dissect, particularly in times of uncertainty, I am not convinced that the recent positive trend for Sterling will continue. On-going concerns surrounding Brexit and its outcome are likely to handicap any major advances and with the Eurozone economy continuing to exceed expectation, the current outlook still seems to favour the EUR over the Pound.
The concerns around Brexit were laid bare by a leaked Government report earlier this week, which indicated that the UK will be worse off after Brexit. The report covered all three Brexit scenarios, including a free trade agreement, access to the single market, or the worst case scenario of no deal being reached at all.
The Government were quick to react and said the findings were only a preliminary assessment but the news is hardly likely to inspire confidence amongst investors.
Therefore despite the Pounds positive run further pressure over the coming days and weeks is a distinct possibility, as Brexit talks starting to dominate the headlines once more.
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