Pound and Australian Dollar fall against the Euro
In this Euro rate prediction, I’ll tell you how the Pound has continuously fallen against the Euro since early May, when we saw the rate above 1.17. The reason for this fall has been mainly the lack of direction regarding Brexit. We currently see the Pound vs Euro interbank rate bouncing between 1.11 – 1.12. This is approaching the lowest we have seen this year and not far off the lowest levels since Brexit was announced.
Expectations for a “no deal” Brexit and a general election have risen in recent weeks since Theresa May’s departure, and the start of the leadership contest between frontrunner Boris Johnson and Jeremy Hunt. Boris has reiterated his intention to take the UK out of the EU on or before October 31st “come what may, do or die”.
The question is, will Parliament allow the UK to leave with a “no deal” or will the government be taken down in a vote of no confidence, triggering a general election? Either way, the Pound will be put under pressure unless we see movement from the EU on renegotiations, which seems unlikely.
Italian debt crisis, a dilemma for the Eurozone
However, let’s not forget the issues in the Eurozone which could weaken the Euro. Italy is in serious debt problems, which is currently 132.2% of their GDP. This is incredibly high! The Italian government are looking to take control of the Bank of Italy, which will take away the bank’s independence. This is illegal under EU laws and could result in financial sanctions and disharmony with the EU bloc. This will weaken the Euro against most currencies including the Pound.
The leadership contest will conclude on July 22nd, when we will know our next leader and the direction he wants to take the country. If it looks like we are heading for a “no deal” Brexit or general election, the Pound will suffer, as this causes more uncertainty.
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