Currency markets are increasingly optimistic about the pound after the resolution of Brexit and good vaccine roll-out in the UK.
British Pound Sterling to Euro forecasts
Sterling has started 2021 strongly against the euro trading at its best levels since April/May last year, after the resolution of Brexit and good vaccine roll-out numbers in the UK.
Societe Generale see EUR/GBP lower at 0.85 by the end of the year (GBP/EUR 1.17), with all the good news of Brexit having been used up.
An improvement on the €1.08 level it dropped to in September before the optimism over a Brexit deal, well-founded or not, started to give the pound a tailwind.
The pound hit its highest level since April 2018 against the US dollar on the final day of 2020, as markets were optimistic after the UK parliament’s approval of Britain’s post-Brexit trade deal.
ING have upgraded their sterling to euro end-2021 forecast from GBP/EUR 1.13 to 1.18 (EUR/GBP 0.88 to 0.85). They predict with the risk of a ‘no deal’ Brexit out of the way, sterling will reap the benefits of a faster vaccination rollout in the UK relative to the eurozone.
Further out they see GBP/EUR at 1.17 (EUR/GBP at 0.85) in the second half of this year and GBP/EUR at 1.22 (EUR/GBP at 0.82) by the end of 2022.
GBPEUR at 1.1532 is 2.7% above its 90-DAY average, range 1.0920-1.1620.
Note that forecasts and predictions for the GBP/EUR exchange rate change all the time, affected by news events and relative sentiment towards the UK and Eurozone economies and this exchange rate is even more volatile than usual because of the uncertainties around Brexit.
Whether the euro will rise or drop in the future against the pound is a difficult question and the answer really depends on many factors. The best way to consider the current GBP-EUR relative value is to check the change in the exchange over a range of periods to the present day. The below table does this for periods going back 10 years.
19 Feb 2021
27 Jan 2021
28 Nov 2020
27 Feb 2020
28 Feb 2016
01 Mar 2011
GBP/EUR 10 year historic rates & change to 26-Feb-2021 : 1.1535
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