Despite strengthening against the US Dollar yesterday, most headlines are focusing on the 8-year low the Pound reached against the Euro. The Pound Sterling forecast below looks at what could happen with GBP exchange rates this week and over the coming months. The table below displays the market movements for a number of Sterling currency pairings so far this year:

Currency Pair% ChangeDifference on £200,000
GBP/EUR-7.38%€15,880.28
GBP/USD+5.23%$13,523.79
GBP/CAD-2.15%CAD $6,967.94

Brexit fears continue to weigh on the Pound's value

On a day that investors rushed for safe haven currencies, due to a number of geo-political issues I’ll come onto later, it was the Euro that benefitted the most, with the GBP/EUR rate hitting €1.0745 at its lowest point. This is the lowest that GBP/EUR has traded since October 2009. It was earlier in 2009 and towards the end of 2008, at the height of the financial crisis that GBP/EUR hit its lowest level of all time. Those planning on making a currency exchange should be aware of this as the Pound has fallen to lower levels in the past.

The GBP/EUR exchange rate fell as low as 1.1234

How much lower could the Pound fall?

Those planning on making a currency exchange involving the Pound and the Euro should be aware that in the past 2 weeks there have been a number of forecasts implying the rate could fall as low as parity.

HSBC, Citi and Morgan Stanley have all made this prediction and believe 1:1 could be a reality during 2018. The reasons behind this aren’t just down to fears over the UK economy, but also due to forecasts of future Euro strength.

On the other hand, Capital Markets are bucking this trend and believe GBP/EUR will see a reverse in fortunes, as they believe the consensus forecast for UK GDP growth of 1.2% next year is overly bearish.

The Pound is currently trading at new Brexit-lows against the Euro, whereas it’s some distance from those kinds of lows against many other major currency pairs.

This may help some client’s paint a picture of the current GBP market.

If you’re planning on making a currency exchange involving the Pound, especially if the trade involves the Euro, I would suggest making your account manager aware of this along with the timescale you have to make it, as there are a number of options available that you may not already be familiar with.

Later this week there is a release of Manufacturing data which could move markets, along with multiple releases out of the Eurozone and the US which could result in movement for Sterling exchange rates. I’m also expecting the markets to watch tomorrow's July Mortgage Approvals with a close eye, after yesterday it was announced that UK property prices dropped 0.1% according to the Nationwide Housing Index.

For more information on how future data releases could affect your currency exchange you can call our currency brokers on 01494 725 353. Alternatively please feel free to email me directly at jxw@currencies.co.uk.

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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.