Will the GBP/EUR pair fall back to their 2016 lows? (Joseph Wright)
Further Brexit jitters have caused the GBP to EUR exchange rate to plummet over the past couple of trading sessions.
In an interview over the weekend the UK Prime Minister, Theresa May commented that her primary focus is likely to be control over immigration as opposed to retaining access to the single market. This suggests a bias towards a ‘Hard Brexit’ as opposed to a softer approach and the currency markets have reacted to this news with the GBPEUR pair breaking below 1.15 and approaching the early 1.14’s at the time of writing.
May announced that the UK would not be able to keep ‘bits’ of EU membership, and since the comments the Pound has been falling across the board and notably against the Euro.
There is some distance for the pair to fall before hitting the lows of 2016. GBP/EUR hit 1.1028 at the beginning of November of last year and as the planned Brexit approaches I wouldn’t rule out further moves towards this level and I think that if the government is able to invoke Article 50 by the end of March as Theresa May plans, I think we could see the pair fall below 1.10 potentially.
Although economic data isn’t the predominant mover of exchange rates currently involving the Pound, investors should pay close attention to UK releases as negative updates have the potential to cause sell-offs in an already under pressure Pound. UK GDP figures will be released tomorrow so feel free to get in touch if you wish to be kept up to date regarding this event.
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