In this Pound to Euro outlook, I’ll tell you how the Pound to Euro exchange rate has made good gains, with rates for the GBP/EUR pair breaking over 1.16 once again.
Much of the positive movement appears to be stemming from optimism that a compromise solution for Brexit could be in the offing, with cross-party support from both the Labour and Conservative parties. Reports keep emerging that talks have been productive, which keeps this potential outcome for Brexit a distinct possibility. Any further statements confirming this way forward could see further gains for GBP to EUR.
However, it should be highlighted that the UK is positioned to contest the European elections on 23rd May 2019, if Prime Minister Theresa May is unable to push the Withdrawal Agreement through Parliament. Such an outcome could throw up some surprises in British politics. The elections could see many voters leave the main parties for alternative parties, such as the Brexit Party, directed by Nigel Farage.
A big shift in this direction could put more pressure on GBP vs EUR, not only as it would change the path for Brexit, but also potentially the landscape for British politics. This would make the next general election very difficult to predict.
Italy received welcome news yesterday after Gross Domestic Product numbers arrived in positive territory, at 0.2% for the first quarter of 2019. The better numbers now take Italy out of recession, having slipped into contraction at the end of 2018. A solid export base from Italy has helped drive growth.
This is good news not just for Italy, but for the whole Eurozone economy. GDP for France also arrived better than expected at 0.3%. This suggests that the worst may now be over for the Eurozone, as the European Central Bank has battled weak growth and low inflation for so many years.
Euro exchange rate forecast
The markets must now consider whether this is a short-term improvement or whether the growth is sustainable, in light of global growth concerns. For example, any trade agreement between the US and China could result in the EU benefiting from additional trade. Any improvement in global trade should be seen as positive for Euro exchange rates.
The Bank of England’s interest rate decision will be held on Thursday, although there is unlikely to be much market reaction from this meeting. With Brexit still undecided, the central bank is unlikely to make any changes this week. However, any clues from Governor Mark Carney as to future policy could see some volatility.
For more information on Euro exchange rate and for assistance in timing the exchange at the best rates, then please feel free to contact me, James Lovick, at firstname.lastname@example.org