In this Euro forecast, I’ll tell you how the EUR has found a level of support against the Pound over recent days, as the continued uncertainty over the UK’s final Brexit position intensifies.
With UK Prime Minister Theresa May once again failing to push through her Brexit deal last week, talk of the UK crashing out of the EU without a deal has started to resurface.
With the revised deadline of April 12th fast approaching and no indication that a resolution is close to being reached, investors are once again shying away from the Pound.
Sterling has seen its value fall away from last week’s highs, which has inadvertently boosted the EUR value by over a cent.
This move is similar to some of the recent trends on GBP/EUR, which has seen the Pound find support up to and just above 1.17, only to see its support levels dip around his threshold. The EUR has then failed to gain sufficient support to boost its value significantly and certainly not sustain any improvements down towards 1.15.
Whether the current spike is going to mirror this trend only time will tell. However, the current market uncertainty indicates that investors remain unsure as to which direction Brexit talks will take, with the UK’s final position remaining unclear.
When should I sell Euros?
As a result of the continued uncertainty, EUR sellers may look to take advantage of the current spike. With no definitive trend on the current rates and the longer-term outlook for the Eurozone economy remaining dovish, there is certainly no guarantee that a breakdown in Brexit talks will mean a major improvement for the EUR.
Whilst the markets fear a no-deal scenario, MPs have clearly shown their distaste for this outcome. Whilst a no-deal remains the default position should no extension be agreed by April 12th, investors will be hoping that it is avoided. Otherwise, we could see the EUR benefit from a sharp sell-off of GBP positions.
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