With confirmation that UK prime Minister Theresa May will invoke Article 50 next Wednesday, many clients holding the single currency have been questioning whether the EUR will gain further support over the coming days?
The Euro has made gains against Sterling of late and we saw another spike following Wednesday’s horrific terror attacks on London, as the markets panicked boosting the EUR value as a result. These gains quickly retracted and yesterday’s positive UK Retail Sales caused the EUR to weaken against its Sterling counterpart, with the pair moving back above 1.16.
Despite another improvement this morning I’m not convinced the EUR will continue to make inroads ahead of the Brexit bill being involved next week, as much of the negative market sentiment has already been factored into the current rates in my opinion.
The EUR itself seems overvalued against the Pound and this is even more poignant when you consider how struggling to gain a foothold against the other major currencies, in particular the USD. Looking at the current EUR/USD rates it is obvious investor confidence in the single market is low and as such any positive developments regarding Brexit could boost Sterling and the recent gains could be quickly eliminated.
With key elections in France and Germany and support for far right parties across Europe seemingly gaining momentum, it is clear that all is not well inside in the EU. As the UK’s unexpected decision to leave the single member state has proved, along with the appointment of President Trump, the expected result does not always come to fruition and it is clear that some people are searching for change.
Any uprising across Europe is likely to sap investor confidence in the single currency further and the current rates against the Pound in particular could look extremely attractive in months to come.
For these reasons I would be looking to take advantage of the current levels, as they may well seem extremely attractive in weeks and months to come.
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