Political Uncertainty causes Sterling Weakness vs the Euro (Tom Holian)

The Pound vs the Euro has fallen towards the end of the week as the Brexit talks continue.

The are now a year on from the Brexit vote and we have seen huge losses for the Pound vs the Euro during this time. Indeed, at one point we were 25 cents lower against the Euro during the last 12 months to before the vote so it is clear the Brexit issue has still not been resolved and it’s likely this will be the case for a long period of time.

This week Theresa May suggested a deal which would guarantee EU nationals living and working in the UK following the Brexit due to take place in March 2019. However, no suggestion of a deal involving reciprocal rights has been discussed and this has caused the Pound to fall.

Politically the UK is in a real state of flux and we are now over a fortnight since the election and as yet the Tories have failed in their attempts to form an alliance with the DUP. To me I think a deal will be struck prior to next week’s Queen’s Speech vote as if not things could look very bleak for the Tories.

If and when a deal is reached between the Conservatives and the DUP then I expect this to provide the Pound with some support vs the Euro but personally I think it will be short term as the Brexit talks will continue to weigh heavily on Sterling vs the Euro.

According to analysts from Danske Bank they ‘do not view the Brexit negotiations as a very destabilising factor for the Eurozone neither economically nor politically’. With Macron and Merkel working closely together I think the talks will be protracted and made difficult for the UK in order to discourage any other members of the EU to consider leaving. Therefore, I think the Pound will face a difficult period ahead against the Euro.

If you’re looking to buy Euros then make sure you’re prepared to act quickly in the event of a Tory and DUP alliance.

If you have a currency transfer to make and would like to save money on exchange rates compared to using your own bank then contact me directly for a free quote and I look forward to hearing from you. I have worked for one of the UK’s leading currency brokers since 2003 and I’m confident of being able to offer you better rates when buying currency as well as helping you with various contract types.

Tom Holian teh@currencies.co.uk