As you would expect UK politics continue to have a major impact on GBPEUR exchange rates. With the resignation of David Davis and Boris Johnson over the last 7 days I would have expected the pound to have lost further ground against the euro. However German Chancellor Angela Merkel appeared to offer a hand and a glimmer of hope to the UK Prime Minister yesterday, as she confirmed she’ll approach the Brexit negotiations in ‘the spirit of friendship’.
It’s great news for the pound that Mrs Merkel appears to be going into the negotiations open minded, however I still believe the negotiations are going to be extremely challenging and the UK Prime Minister will have to give into further demands if she is going to negotiate a bespoke trade deal that she keeps eluding to. Therefore I expect the pound to come under pressure throughout Q3.
For Brits that are buying properties abroad and need to buy the full balance over the upcoming two months, I would suggest buying your euros upfront. If all of your sterling is not available you can buy your euros and pay later using a forward contract. For euro sellers buying sterling, there is an argument to sit back and set a target level and once that level is reached pull the trigger.
Going into Q4 I am a strong believer that the UK PM will secure a deal with the EU and therefore the pound will strengthen quite considerable. Furthermore, if a deal is reached I expect this will prompt the Bank of England to hike interest rates, which provide further strength for the pound. If my predictions materialise clients buying pounds with euros have three months to make arrangements but at any time the pound could strengthen considerable if a deal is reached.
If you are converting GBPEUR or EURGBP and would like to achieve the best exchange rates on the market whilst receiving constant updates and support feel free to outline your position to me firstname.lastname@example.org and I will respond with your options and the process.