The EUR could come under pressure over the coming weeks and months, with a host of key economic & political decisions likely to impact the single currencies value.
GBP/EUR rates have been more volatile than usual of late, with highs of 1.20 and lows of 1.10 over the past few weeks. The current levels of 1.15 are being driven by market sentiment surrounding the UK’s Brexit from the EU and comments made by Prime Minister Theresa May, who is taking a hard-line stance ahead of the triggering of Article 50 in March.
The EUR has benefited from the uncertainty surrounding Brexit and detrimental effect this has had on investor confidence and ultimately the value of the Pound. I do not believe the highs mentioned for the single currency were reached through an overriding confidence in the Eurozone and as such you could look at the current value as over inflated.
If we delve deeper into the current economic climate inside the Eurozone and all is not well. The European Central Bank (ECB) have extended their monetary policy (QE) programme to support their flagging economy and with key elections in Holland, France and Germany this year and an uprising of far right parties, the landscape could look significantly different in 12 months’ time.
The EUR itself has dropped to over 10 year lows against the USD and this is poignant in my opinion. The USD has gained support over recent months and with further interest rate hikes likely this year, the EUR could struggle to make any sustainable impact against the greenback for the foreseeable future.
I feel that the EUR is going to find life extremely tough going in 2017 and if we see any positive information released from the UK regarding how we will facilitate our Brexit, then GBP/EUR rates could recover, as the Eurozone will be negatively affected by the UK’s departure, with some arguing the impact will be more severe for them that us.
Therefore I would be extremely tempted to secure any EUR transfers sooner rather than later, to take advantage of the current levels against Sterling and to protect further losses against the USD.
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