Will the Pound recover at least some of its losses against the Euro this year?

As a UK based, specialist currency exchange brokerage we’re on the frontline when it comes to Sterling sentiment, particularly between the GBP/EUR pair as the majority of exchanges we assist clients with are between the two currencies. Personally, I think that last week’s surge in Sterling’s value is more of a short-term buying opportunity as opposed to a turning point for the currency, and I still believe that many major institutions price targets of Sterling trading close to parity with the Euro sometime next year is a strong possibility.

Over the weekend, Reuters polled a number of economists regarding Sterling’s fair value, and those hoping for a Sterling recovery back to the levels of late last year look out of luck!

The poll showed that most think the 20% drop in the Pounds value has brought the currency down to its fair value, with the medium rate on EUR to GBP being 88 cents (GBP/EUR 1.1363) for each Pound.

Notable events this week within the Eurozone

Whilst the US election is dominating financial headlines this week, there are some issues over in Europe, which in calmer market conditions would likely be key taking points.

On the 4th of December there will be a key referendum in Italy over plans to reform the constitution, and it’s looking like the current Italian Prime Minister, Matteo Renzi will lose. Just yesterday, a former leader of Renzi’s ruling Democratic Party called Pier Luigi Bersani announced that he will be voting against Renzi’s plan to change the constitution, widening the divisions within the Democratic Party (PD).

These types of setbacks can result in Euro weakness as it looks like there could be uncertain times ahead for Italy, and with both France and Germany also having key referendums next year, there could be scope for Euro weakness in the not too distant future.

It’s a quiet week in terms of economic news releases this week in Europe, so I expect sentiment surrounding GBP/EUR to continue to drive the pair as we’ve seen for much of this year.

With a negative economic landscape still set for the UK, further falls in the Pounds value could arise in the months ahead. Clients buying Euros may want to consider their options, why not speak to our team on 01494 725 353 or email me if youd like to learn more.


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