In the last month, the GBP/EUR pairing has seen an interbank range of movement of over 3.5% and in the last 2 weeks, GBP has lost almost 4 cents against the EUR, with interbank levels opening this week trading just above 1.1380.
|Currency Pair||% Change (Month)||Difference on £200,000|
Sterling is experiencing a 10-day streak of unanswered losses against the EUR, which has largely been influenced by ongoing political friction between the UK’s main political parties, which has led to suggestions that the deadlock could result in a ‘no-deal’ Brexit scenario, come the appropriately ominous Halloween exit date.
Sterling sentiment has typically weakened to any suggestions of a ‘no-deal’ scenario, so questions surround whether this poor run of form will continue in the short term, or at least leading up to the date schedule for the next meaningful vote of the Prime Minister's exit deal on 3rd June.
It’s a different story for fibre (EUR/USD) interbank exchange rates, as the pairing is currently trading at the lowest levels since June 2017.
The European export economy has seemingly been at the mercy of US President Donald Trump’s bullish approach to trade negation and recent threats to impose heavy tariffs on major European exports, such as automobiles from the Eurozone’s largest economy Germany, which has seen the single currency suffer.
Despite the pressures the GBP/EUR pairing is facing in the midst of Brexit, its important to consider the issues the EUR is also facing against the USD, since it’s the most traded pairing globally, and if the UK Government can secure a deal in Parliament and in turn provide clarity for the next steps in the exit process, it could open the door for a resurgence in sterling sentiment.
The elections for the European Parliament this week will be significant, considering the political and economic fragmentation that is being experienced across the bloc and sentiment in the euro could be influenced as a result.
Voting across the 28 member states will go to the polls between 23rd - 26th, to elect 750 members of the European Parliament for a 5-year term. The European Parliament is the only direct elected EU institution and it shares powers over the EU budget and legislation with the council of the European Union.
The polls currently indicate that the centre-right European People’s Party and the centre-left Socialists & Democrats are likely to remain the larger groups in Parliament, but they also suggest that they could lose their combined majority for the first time, with some Eurosceptic and anti-immigration parties looking set to see the greatest gains and Nigel Farage’s Brexit Party likely to gain the most votes in the UK.
It could therefore be a volatile week for EUR currency markets and with a raft of Markit Industry data also set to be released on Thursday with the addition of German Gross Domestic Product (GDP) data, clients with a short term EUR requirement could take advantage of the various contract option available to them in order to manage market exposure.
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