GBP EUR Rallies On Expectation of Increased EU Divorce Offer

The pound has found some support at the end of this week after a poor performance across nearly all of the major currencies. GBP EUR has pushed back over 1.12 this morning after rumours have circulated that UK Prime Minister Theresa May will possibly look to increase her offer of a financial settlement to the EU from €20 billion to €40 billion. Theresa May is in Sweden so any commentary here is likely to have an impact on the price of sterling.

If an offer is made later today the pound could react depending on how well that offer is received. The key to the direction will be the response from EU leaders but if received badly then the pound could fall against the Euro. The response today could also tie in to next week’s budget which will be delivered by Chancellor Philip Hammond and this is likely to be a big market mover next week.

UK data softened this week after retail sales numbers fell to their lowest level since 2013. Although the figure was higher than expected the fact that it is materially lower than four years ago is a concern for the British economy and hence the pound. With no UK economic data releases today the focus will be on a speech from European Central Bank President Mario Draghi and construction numbers this morning.

UK Gross Domestic product figures are released next week and any improvement here could help lend support to the pound. Considering the NIESR estimate pointed to stronger GDP going forward then there is the potential to see some upside for sterling exchange rates.

It is clear there are so many factors revolving around politics and Brexit which are having a direct impact on the price of sterling and the next week will be crucial in where rates will be heading next. Clients selling Euros continue to see an excellent opportunity for buying pounds. If you would like to discuss your requirement and the impact that these economic and political events are having then please get in touch with me and I will be happy to give you my thoughts. My email address is jll@currencies.co.uk

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