Welcome to our latest EUR forecast. At the time of writing, the EUR sees it value against the GBP & USD mirrored almost identically. This is ahead of what is likely to be a key time for the markets, the Brexit deadline of March 29th.
Pound euro exchange rate forecast: Brexit uncertainty weighs
GBP/EUR rates hit a high of 1.1427, whilst EUR/USD rates touched 1.1440 overnight. It is rare to see both pairs trading almost on par, which is likely a result of the current unique trading conditions.
With the Brexit deadline fast approaching, investors’ risk appetite for the Pound remains minimal. This is especially the case whilst the prospect of a “No Deal” hangs over the market. That said, investors currently view it as the less likely outcome.
The current talks between the UK and EU seem to be at an impasse once again. Currently, UK Prime Minister Theresa May is looking for the EU to reopen negotiations, over the much maligned Irish back stop agreement.
Will the euro strengthen this week?
In the short term, the euro may go up in my opinion, as currently the EU’s stance is that they have already looked at other alternatives, none of which were viable.
Whether this is just a political stand-off is now the question investors will be asking themselves. Are the EU likely to concede some ground as we enter the 11th hour of negotiations?
Their current stance seems to indicate that they won’t. However, the same could have been said during talks over the Greek and Italian bailouts.
The problem with the current disparity is that UK MPs seem to want a complete removal of the Irish backstop. This is a scenario which is unlikely to be accepted by the EU or Ireland.
The current uncertainty is helping to support the EUR value. This would be lower in my opinion, due to the uncertainty and current contraction of the Eurozone economy.
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