For today’s Sterling Euro forecast, we’ll look at how the Pound has had a good morning against the Euro in this morning’s trading session. Sterling’s small gains seem to buck the recent run of form for the Euro against the Pound.
Sterling has had quite a wobble again in the past couple of weeks. Investors and speculators have chosen to steer clear of the Pound whilst the uncertainty still remains, over who will be leading the Conservative Party in the coming months and what their plans could be surrounding Brexit.
UK average earnings figures this morning showed an increase for workers within the UK, which is a good sign. UK unemployment levels remained at a low of 3.8%, which is a positive sign in what has been a stumbling economy recently.
Brexit is still the key to where the GBP/EUR rates may head in the coming months, in my opinion. I feel that until the grey cloud of uncertainty regarding Brexit is lifted from the UK’s head, then the Pound may continue to struggle against all major currencies including the Euro.
Euro predictions: Will the ECB look to weaken the Euro?
Another point of note is that members of the European Central Bank (ECB) are starting to look at recent Euro strength as a slight concern. We have two key speeches this week from ECB President Mario Draghi and Vice President Luis de Guindos, which are both due tomorrow.
There have been recent rumours and signs that the US could cut interest rates in the coming months, and there are Brexit problems for the UK. As a result, Euro exchange rates have made reasonable gains against the Dollar and the Pound in the past few weeks. This may start to weigh on the Eurozone economy, should it not be countered.
Many feel that comments from Mr. De Guindos yesterday that the ECB were ready to act with all instruments at their disposal was a sign that a move may be coming. However, it is also key to realise that the ECB do not have a lot of room to play with regarding interest rates or other fiscal policy. So there could be a tricky period coming up for the ECB in the next few months. This is why these speeches will be key to Euro strength or weakness in the coming weeks.
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