The Head of Foreign Exchange strategy at Rabobank in London has this week suggested that the EUR/GBP rate could hit parity, if the UK and EU fail to reach a Brexit agreement in time. More on the driving factors behind this in the Euro report below. The table shows the range of exchange rates for GBP/EUR throughout the past month, showing the difference in return you could have achieved when selling £200,000.00.
|Currency Pair||% Change||Difference on £200,000|
The deadline is March the 29th next year and UK and EU leaders are now eyeing the European Council Summit on the 18th of October for a deal to be struck. This would then allow enough time for everything to be in place by the deadline next year, although the UK government is currently struggling to come to an agreement amongst themselves as anyone paying attention to UK politics will be aware.
The Pound to Euro rate has been as low as 1.0746 over the past year, so a move down towards parity will take a big move but Rabobank aren’t the only institution warning of the potential move to parity so it shouldn’t be discarded.
One of the key talking points this week for the Euro is the disappointing German Factory order figures. They have fallen to their lowest levels since January 2017, and Monday’s figure showed a drop of 4% from the previous figure, which highlights how significant the drop is.
The Euro dropped in the wake of the news but remained resilient against the Pound. This is because the GBP/EUR pair reflect the anxiety towards Brexit more so than any other pair. My personal opinion is that the Pound is very cheap in relation to the Euro at present, and should the issues surrounding Brexit be addressed we’re likely to see the Pound spike upward quite dramatically.
The next potential market mover for Euro exchange rates comes at 9am on Thursday, when the Economic Bulletin with be released. It’s published two-weeks after each Governing Council meeting, and although the European Central Bank isn’t expected to withdraw its Asset Purchasing Plan until the end of the year, I think any changes to this plan could result in fluctuations for EUR exchange rates. Do feel free to get in touch if you wish to plan around this event.
For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.
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