Whilst the EUR continues to find support against GBP, investors will be aware that much of the single currency's current value is the by-product of a weakening Pound, rather than an overriding confidence in the Euro.
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They will now be looking closely at the Eurozone economy and how it will fair following the European Central Banks (ECB) decision to end their Quantitative Easing (QE) programme last month. This 2.5tn Euro stimulus programme was considered by and large to be a success and helped support the Eurozone by propelling its economic growth, which in turn allowed the EUR to flourish against many of the major currencies, including Sterling.
However, with the Eurozone economy showing signs of fragility over recent months and a general consensus that indicates 2019 will bring with it lower growth, political turmoil and a likely fallout from the UK’s Brexit, are EU sellers leaving themselves exposed to a multitude of negative variables over the coming months?
When we also consider that 2019 will bring with a change of guard at the ECB, with current President Mario Draghi tenure due to end later this year, there is clearly many questions that remain unanswered.
How the Eurozone economy will progress and what policies the ECB will look to instigate in order to try and help support it, only time will tell. However, it is clear that with the UK’s impending exit from the single bloc likely to change the economic landscape of the Eurozone indefinitely, I would not be prepared to gamble on a major spike for the EUR against GBP over the coming months.
Yes, the Pound's woes look set to continue in the short-term and any failure by UK PM Theresa May to push through her Brexit deal could add to further pressure but I still firmly believe that the Pound has far more scope for improvement than the Euro does and for this reason I would be keen to protect any currency positions where possible.
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