The GBP weakened against the EUR going into the Christmas period and ended the year with mid-market levels fluctuating between 1.10 and 1.11.

Sterling has since bounced back and last month saw gains of as much as 5 cents, which saw the pairing momentarily exceed 1.16. In monetary terms, well-timed transfers at the highest levels could have achieved in excess of €11,000 more on a transfer of £200,000, in comparison to the lowest levels.

Currency Pair		% Change in 1 month	Difference on £200,000
GBP	EUR	5.01%	€11,080

Since the market is still with within 2 cents from the highs seen only a couple of weeks ago, clients buying Euros are still experiencing some of the better positions to consider transfers in the last 12 months.

However, Sterling’s recent gains were influenced by the shared cross-party views in Parliament, that a no-deal exit from the EU would be the least favourable outcome and since it appears this scenario has not entirely been ruled out, Sterling has lost some ground.

This being said, there are growing political and economic concerns coming from key Eurozone nations, which provides optimism that the GBP/EUR pairing could resist further losses, but since Brexit is such an influential driver of Sterling markets, there’s no guarantee of stability and there could be opportunities for EUR gains.

ECB interest rate decision and monetary policy

Italian recession fuels further concern for Eurozone economy

Last Thursday, it was confirmed that the Italian economy had slipped back into a recession for the third time in a decade, as the latest GDP figures for the Europe’s third largest economy, were released, which saw a reduction year on year for Q4 of 0.4%

The data is particularly concerning since it highlights Italy as an exception to the trend, which data has shown that other key eurozone economies are in fact expanding.

Last year, the Eurozone experienced a general slowdown, with easing inflation and slow growth figures.

The bloc’s largest economy, Germany, also suffered a drop in its exports which resulted in an slight economic contraction, so with the renewed recession in Italy, it could influence further vulnerability within the Eurozone and lead to further devaluation of the single currency.

There will be purchasing managers index (PMI) data out this week across the Eurozone, which will provide an insight into the health of the various industry sectors, but with Brexit the key driver of associated currency markets, volatility should be expected.

For more information, please contact your account manager here at Foreign Currency Direct.