It was a difficult morning for the Pound yesterday with cautious releases from the Bank of England the main driver for Sterling weakness.
Despite growth projected throughout 2017 for the UK economy, the latest inflation report left investors questioning the likelihood of the BoE raising interest rates in the near future.
As a result, the Pound slumped by almost 1.3% to the low 1.16s against the single currency in the early session providing anyone holding Euros a fantastic selling opportunity. A well timed 250,000 EUR transfer would have brought back an extra £2,900.
Governor Mark Carneys cautious and predictably dovish tone regarding the effects of the on going Brexit talks did very little to draw back investors appetite for the Pound. However, Sterling did regain some of those losses throughout the afternoon, reaching 1.164 on the back of a confident 77-page game plan pitched by Brexit secretary David Davis in the House of Commons.
"Trade deals" have been all the rage since Trump has been in power and yesterday's outbreaks from leading European figureheads voicing their concerns over the President's likely favourite for the Ambassador to the EU role would have put the Eurozone's links to the US under considerable pressure.
Having previously credited himself for helping take down the soviet union and recently supported the UKs push for Brexit, Ted Mallochs views are judged to have undermined the values of the European union, causing many leaders to call for the European parliament to reject his access to the role.
With the US being one of the euro zones most prolific trade partners, any future obstacles to trade could seriously hinder the strength of the Euro further down the line.
There has also been added pressure on the political front within the euro-zone, as the french presidential candidate Francois Fillon faces an up hill battle to cement his place at the top of the conservative party following releases that he may have been paying his wife hundreds of thousands of Euros for work that she hadnt done. Given that Fillon was favoured by investors for his pro-euro stance, his potential fall out from the elections could also spell weakness for the single currency in the months to come.
Although some analysts have called for further clarity from the 77 pages provided by David Davis, they did once again re-iterate the UKs desire to protect the rights of the 2.8 million EU nationals living in the UK. This should be seen as a political gesture moving into the Brexit negotiations making it far more likely for UK nationals living abroad to have their rights protected too.
If you are looking to move abroad in the coming months, why not open a free account here at FCD, one of our currency specialists will happily go over all the variables that are likely to affect your budget and help you make an informed decision.
Pound to Euro exchange rates remain volatile as we approach March with Brexit and the elections in Europe still at play. Protecting your currency position ahead of the unknown may save you thousands on a transfer, so why not give us a call on 01494 725 353 to find out how much we can save you.
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