Signs that EU27 are toughening their stance to Brexit could weigh heavily on Pound to Euro exchange rates. The President Donald Tusk is set to release his Brexit guidelines by which the UK will have to adhere to all laws and budget commitments in order to receive a transitional deal.
It’s been reported that the remaining EU member states are set to approve a set of guidelines that call for Brussels to ‘stick to their guns’ and adopt a tough stance with the UK in the up and coming negotiation talks. In essence this means that Britain will have to accept the EU’s laws, court and budget fees if it wants a gradual and stress free transition from the EU.
It will be interesting to see what effect this has on both Euro and Sterling exchange rates. Mr Tusk has called for a summit of the remaining 27 states to adopt the guidelines. The guidelines have been well received by the other member states and described as a ‘well-structured approach’ to negotiations.
This raises questions that the EU are better prepared when going into negotiations, having been negotiating trade deals for the EU (with the UK included) since 1973. I personally believe that this could play into the EU’s hands and therefore might help the Euro to strengthen against the Pound once we enter into the negotiation period.
Reports are suggesting that investors are bracing themselves for the highest levels of volatility since the June Brexit vote. The first leg of the French elections is now less than two weeks away and a surprise Marine Le Pen Victory still cannot be ruled out. Yesterday it was reported that investors started to sell off French debt in fear of a surprise Melenchon victory due to his stance on tax tariffs.
As history has told us in recent times, the polls can indeed by incorrect and therefore it is almost impossible to call which way the French Election will influence exchange rates. What we can do for you at Foreign Currency Direct is eliminate the need to gamble. If you have an upcoming Euro requirement, why not take out the volatility of the French elections by securing a rate now with a small deposit. Get in touch to find out how a forward contract can help you on 01494 725 353.
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