Euro sellers have been in a strong position for the past two and a half years after sterling dropped dramatically in the wake of the Brexit vote.
Whilst they’re still in a strong position the boost to the pound’s value this year is eating into those gains, with EUR/GBP dropping below 0.86 for the first time in almost two years.
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The messages from European leaders have been mixed regarding the proposed extension to Article 50, which would allow the UK to continue to trade under the current conditions whilst the final details of a Brexit deal are arranged. French President, Emmanuel Macron has adopted a stronger tone than many of his counterparts this week when he stated that the EU could only agree to extend the Brexit negotiations if Britain provides clear reasons for requesting the delay.
This is a much stronger tone than German Chancellor, Angela Merkel’s approach as she demonstrated more flexibility when she said ‘if Britain needs some more time, we won’t refuse but we are striving for an orderly solution’.
The euro has been weakening owing to a number of concerns surrounding the slowing economies in the Eurozone, and this coupled with further boosts to the pound overall are likely to work against the EUR/GBP rate moving forward in my opinion.
The slowing economies within the Eurozone along with the political unrest is taking its toll on economic sentiment within the area, as the economic sentiment within the trading bloc has dipped for an 8th consecutive month. This has brought the level down to a two-year low which is also being reflected within the currency’s value. If you would like to be updated in the event of further drops in the euro's value, do feel free to register your interest with us.
The key data release this week is likely to be tomorrow’s Inflation data which will be released at 10:00. The previous figure released was 1.1% which is considerably lower than the 2% target of the European Central Bank.
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