The single currency’s woes accelerated during last week’s trading as rumours of a more cooperative DUP stance conspired with a string of feeble economic data from the European bloc and shifted the balance of market sentiment behind sterling, leading it to hit a 9 month high at 1.16 against the euro, on the back of a 2.75% rise throughout the week.

Currency Pair% Change in 1 monthDifference on £200,000
GBPEUR5%€11,600

A heavy drop in consumer confidence and the bleak ZEW/IFO surveys, in particular from Germany, once again highlighted the economic frailties within the bloc, and teed up a very cautious European Central Bank statement in which they reiterated that a shift in economic policy is a long way away from being considered.

Ultimately, this all did very little to help the euro recover much ground against a rampant sterling and has led many looking to buy Pounds with Euros to drastically reconsider their positions.

I wouldn’t be surprised to see this negativity filter through to Thursday’s key GDP release. We have already seen the IMF recalibrate its growth forecasts for the Eurozone having sensed the a lack of investor confidence as a result of the global trade tensions.

If this does prove to be the case there is quite a strong argument to suggest the Pound might continue to push on past the 1.17 mark.

Will GBP/EUR find stability above 1.17?

Long-term Euro weakness already factored in?

I found it interesting to note that the USD EUR pairing remained relatively range bound, suggesting that the markets might have already factored in the weak releases from the European bloc.

If there was a strong switch in trend against the euro then one would have thought the greenback would have capitalised on it too. The lack of movement here might indicate that the single currency may have reached a fair pricing level and expecting further weakness might be slightly too ambitious. Those looking to purchase euros with pounds might be wise to capitalise on the current highs as a result.

The Italian Prime minister Conte may well have rocked the boat over the weekend, once again criticising France and Germany for pursuing national interests whist pursuing “true European integration”. I think more than ever this year, European unity and disunity could prove to be a key driver on euro exchange rates, particularly with the EU soon to lose a pro-euro figurehead in Merkel. Uncertainty from this may provide a bit of volatility to start the week; get in touch with your account manager to see how we can help you make the most of your currency transfer.

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