For today’s Pound v Euro forecast, we’ll examine how GBP/EUR rates fell, as UK employment data showed wage growth for March came out lower than expected.
There was a reading of 3.2% for the first quarter of 2019, compared to the markets’ prediction of 3.4%, and also down against the three months to February’s figure of 3.5%.
The employment data today also showed that employment growth slowed to 99,000, which was some way short of the forecast of 135,000.
Wage growth and employment in the UK had grown throughout 2018, despite the uncertainty caused by the merry-go-round of Brexit talks. Confirmations of these falls in numbers at the start of 2019 have signalled a possible start to a tempestuous period for the wider economy.
Brexit cross-party talks
This afternoon, Shadow Chancellor John McDonnell poured cold water on market hopes of a positive conclusion to the cross-party Brexit talks, saying that “There has been no significant shift by the government.”
Only two weeks ago, I reported that the rumours of positive talks between the Tories and Labour had pushed the Pound to a 1-month high, reaching 1.1720. However, there was nothing certain regarding the rumours and, knowing the history of Brexit events, nothing should be taken for granted, which has proved to be the case.
Today’s double blow of negative news has pushed the Pound down to its lowest levels against the Euro of 1.1502. This equals an 8-week low, a massive blow to the outlook for the Pound.
Buy Euros rates still higher than 2018 average
It is worth pointing out that the current lows still leave the rate 2 cents above the 2018 average of 1.13. So, despite the disappointment of seeing the Pound lose ground from the highs seen this year, a purchase made now is still likely to cost you a significant amount less now than for the majority of 2018.
There’s no sign of a Brexit deal being reached any time soon (if ever), and almost certainly not before next week’s European elections. Prime Minister Theresa May was keen to avoid this, with her party not expecting to fair well.
The Pound could be in for a not-so-encouraging second and possibly third and fourth quarter, if we do not see a change. Otherwise, we could have seen the best of the Pound already this year.
Feel free to contact me directly if you’d like to discuss these factors, and the potential impact they could have on your currency transfer. You can email me directly here.