GBP EUR Pushes Higher over 1.13

The pound has made some small inroads against the Euro with rates for the GBP EUR pair breaking over 1.13 this morning. The mood has been slightly positive following the Spring Statement from Chancellor of the Exchequer Philip Hammond earlier this week which has helped support the price of sterling. The upbeat speech certainly didn’t provide any reason to sell the pound and if anything provided some reassurance that the economy is still healthy.

The markets are now eagerly awaiting the EU summit 22nd/23rd March where the transitional arrangements for Brexit are likely to be agreed and finalised. This is widely expected to go through without any hitches and could see some relief for sterling exchange rates. However any gains are likely to be limited considering the much harder task of future trade must be negotiated which is expected to commence at the end of this month. The pound could come under pressure here against the Euro if both sides start with strong red lines and if an agreement seems unlikely. Any risk of a no deal scenario is likely to see the pound come under considerable pressure and cannot be ruled out at this time.

My view is that in the medium term should an agreement be reached that works well for both sides then the pound could see strong gains against all of the major currencies including the Euro. Those clients hoping for better opportunities to buy Euros would be wise to consider taking advantage of any spikes as they happen as there are likely to be many new developments over Brexit that are both positive and negative which the pound will almost surely react to.

Economic data is light today for both the UK and the EU although a speech from a European Central Bank member this afternoon could help shape the future direction of the Euro. Tomorrow however should be more interesting on the data front with EU inflation day. Any pick up in in inflation will almost certainly help boost the Euro.

For more information about sterling or Euro exchange rates then please get in touch with me James at jll@currencies.co.uk

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