In light of the turbulent political situation in the UK, the GBP/EUR pairing is currently trading at 5-month lows, with mid-market levels ending yesterday’s trading below 1.12.
|Currency Pair||% Change (Month)||Difference on £200,000|
In recent weeks, the steep sell-off for the GBP has seen mid-market levels depreciate by over 5 cents. Despite sterling’s frailties over the last few weeks, risk forecasts for the currency have been downgraded by global economic analysts ING, with initial reports suggesting that rising inflation across the Eurozone and the possibly of the first US interest rate cut in a decade, could be playing a factor.
Since much of the euros’ recent gains against the pound have been influenced by the domestic political uncertainty in the UK, any indications that point to a likely successor to current Prime Minister Theresa May, could provide enough clarity to influence sterling sentiment and thus cause movement against the euro.
It might also be of consideration for clients with an upcoming transfer selling euros, that the interbank rate has only just seen slight gains from what were 2-year lows against the USD and with the US seemingly on the front foot regarding its approach to global trade negotiations, the single currency could be vulnerable in the short-medium term.
This morning, a speech from the President of European Central Bank (ECB) Mario Draghi will headline several speeches from a number of ECB members and EU Commissioners throughout the week, which could provide an insight into the monetary and fiscal landscape for the Eurozone and could in turn have an impact on the sentiment in the single currency.
In addition to this, inflation data for the bloc will be released this morning, with current indications suggesting that there could be a drop by as much as 0.5% from the previous month, but it will likely be commentary from the ECB’s President and EU Commissioner Jean-Claude Junker that influence market movement.
For more information, please get in touch with your broker, or contact our trading floor directly on 01494 725 353.
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