The EUR has seen its value slip against GBP this week, despite UK Prime Minister Theresa May losing her key Brexit vote in the House of Commons and subsequently, just surviving a vote of no-confidence in her leadership.
These two would usually precipitate a drop in value for Sterling but it seems as though investors had priced in the outcomes to such an extent, that the Euro had no scope for any further improvement. A subsequent sharp sell-off of EUR positions by investors weakened its standing against both the Pound and US Dollar, from which it is yet to recover.
The Euro was trading back above 1.14 against GBP, which represented a two month low on the pair. It also saw it value drop by almost two cnets against the greenback, with EUR/USD rates now trading at very similar levels to GBP/EUR, just under 1.14.
Despite the single currency finding plenty of support above 1.14, have we now seen the EUR hit its peak against the Pound?
Personally, I think it is telling that the Euro value dropped this week in the face of the on-going Brexit drama and the entailing lack of market confidence in the Pound. Whilst this uncertainty has no doubt helped support the Euro over recent months, its value now seems inflated and is likely only there due to a complete lack of market confidence in Sterling.
With the Eurozone facing a slowdown in economic productivity and the ensuing growth forecasts softening as a result, the Euro is likely to face on-going issues.
Add to this the political unrest in France and a possible recession in Germany and it’s clear that all is not well inside the Eurozone economy.
Any clients looking for the EUR to significantly improve against either GBP or the USD could be left disappointed.