Euro Rate Forecast

Currency experts forecast on the Euro

Is This the Calm Before the Storm for Sterling?

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Sterling hasn’t fluctuated much this week despite the UK seeing its first leadership debate of this general election campaign. Markets are currently optimistic about the direction of politics in the UK, with pound sterling trading at around 1.1681 against the euro, and 1.2935 against the dollar. It’s been a tumultuous year for the markets, so let’s have a look back at the rollercoaster ride for foreign exchange.

No Deal Impact on the Euro and the Pound

Prime Minister Boris Johnson swore when he took office in June, that he would ensure the UK would leave the EU on 31st October “with or without a deal”. As the Halloween deadline crept up, it looked more and more likely that there could be a cliff edge Brexit, with the UK crashing out of the EU suddenly and plunging the country into World Trade Organisation (WTO) rules, with businesses facing the prospect of tariff and non-tariff barriers when wanting to trade with the EU. This would result in huge additional costs for companies and send the markets into a downward spiral.

Despite doing the near impossible, the Prime Minister negotiated a new deal with the EU. Markets responded favourably, but unfortunately, Parliament prevented the deal being voted through once again. This resulted in Boris Johnson calling a general election, causing the pound to drop to 1.1574, with the prospect of even more uncertainty shaking the markets. At this point in October, it was also unknown whether the EU would grant the UK a further extension to Article 50, to avoid that no deal Brexit.

Sterling Against the Dollar

Sterling has risen 5% against the dollar since the end of September, correlating with the prospects of the Conservative Party winning a majority on 12th December.
Assuming the Conservative Party win an outright majority as the polls currently predict, 2020 could be a good year for sterling. The British pound could rise by 8% by the end of 2020 to $1.39 according to analysts. This would be its highest in 18 months.

However, it was around this point in the 2017 election that Labour began to make gains and change the narrative of its campaign. Labour is due to publish its manifesto today, and focus on somewhat radical plans to overhaul the economy and public spending not seen since the 1970s.

Given the markets’ awareness of the volatility of the UK electorate, we might not see a rise in sterling until after the election when we have a clear result.

If you would like further information or a free quote when buying euros, feel free to contact me directly and I look forward to hearing from you.

Tom Holian teh@currencies.co.uk

Tom Holian
Having worked in the foreign exchange industry since 2003, longer than some of today’s currency brokerages have been in business, Tom draws on his considerable experience of the currency markets when writing his Euro exchange rate forecasts.

Sterling Holds Steady Following Leadership Debate

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Sterling has dropped a fraction since yesterday against the dollar, coming in at 1.2915 and at 1.1667 vs the euro respectively at the time of writing. This is most likely reflecting the recent sentiment around the general election race in the UK, as the Conservative Party holds a healthy lead in the polls.

Over the last week, sterling has gained 1% over the dollar after several favourable announcements from Prime Minister Boris Johnson, who increased his popularity. However, in last night’s leadership debate, both the Prime Minister and Opposition Leader Jeremy Corbyn appeared to perform well.

All about Brexit

Last night marked the first leader debate of this general election, as a head to head between the two main party leaders. A snap YouGov poll immediately following the debate effectively put Johnson and Corbyn neck and neck. 51% said that the Prime Minister had won, and 49% said Corbyn has performed better during the debate. There were mixed responses to their policies and their form, as Corbyn was rated as more trustworthy (45% vs 40% for Johnson), but Johnson was seen as far more Prime Ministerial (54% to 29%). However, on the important question of Brexit, the Prime Minister stormed ahead, with 63% regarding him as the winner of that section of the debate, against 27% for Corbyn.

Whilst the smaller parties were not invited to take part in the leaders’ debate, the Liberal Democrat leader Jo Swinson did take part in an interview after the main event, making it crystal clear that her party’s stance on Brexit would be to revoke Article 50 on day 1 of a Liberal Democrat government. She also heavily criticised Jeremy Corbyn for not giving a straight answer over whether the Labour Party would campaign for or against Brexit in another referendum.

Swinson will be attempting to reverse the Lib Dems’ slump in popularity since the start of the campaign, with the party on 14%, its lowest number in 6 months.

Whilst the Conservative Party has a relatively clear direction on Brexit and continues to do well in the polls, we shouldn’t expect to see too much fluctuation in sterling. However, it is early days in the campaign, so anything can happen.

Will The Euro strengthen or weaken on Friday?

Keep an eye out for our Friday blog, as the euro could react to a big announcement of the HIS Markit Purchasing Manger’s Index (PMI) surveys, which measure industry output. Last month, the services and manufacturing barometers rose ever so slightly, and the markets are expecting the same for November.

For more information on what may influence your EUR/GBP transfer in the coming weeks, get in touch with me directly, Daniel Johnson at dcj@currencies.co.uk, or speak with a member of our team on +44 (0)1494 292 675.

Daniel Johnson