What can we expect next for the pound to euro rates?

2017 should be an interesting year for GBPEUR as we learn of fresh political uncertainty in the Eurozone and also the UK. The question is which currency will be the weaker, will it be the Euro or will it be the pound. In my personal opinion we will see both currencies come under real pressure but it could be at different times. Therefore I expect a rocky performance with some big swings on the market. It would not be out of the question to see rates between 1.10 and 1.30 in 2017. If you think that is unrealistic the swings this year have been between 1.36 and 1.06 which is 30 cents. 20 cents next year is by no means out of the question.

Firstly starting with the pound the big news will be the Supreme Court decision and market reaction. I personally expect the Supreme Court to uphold the decision that the UK Government must seek parliamentary approval to trigger Article 50. Whilst loosely GBP positive as it makes a hard Brexit less likely, following this release I think attention will shift towards the outstanding big questions over Brexit, namely what it means and the type of deal the UK can get. These negotiations are unlikely to be smooth and it will be this uncertainty which will act as a hindrance to the pound and will see sterling lower.

The Euro will come under further pressure owing to the political uncertainty in the European Union as the French and Germans go to the polls. I expect this uncertainty to manifest in the latter stages of the year as we approach Summer after the French elections in April. The greater degree of uncertainty stems I believe from the German elections which are in the Autumn.

I believe GBPEUR will retest the lows towards 1.10 in the first 3 months of 2017 before rising towards the end of the year as attention turns to European affairs. If you have a currency exchange involving the pound and the euro then please get in touch with me to learn more about the latest trends and themes which will effect your exchange rate. Please email me Jonathan on jmw@currencies.co.uk to learn the latest news that might influence your exchange rate.

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