Brexit is back in the news after being replaced in the headlines so far this year by coronavirus which is not good for GBP.
British Pound Sterling to Euro bank forecasts
The Euro pulled back in early September after it touched $US1.20.
The trigger for this retreat were worries in the market that the EUR rise had come too fast and strong for the ECB’s liking.
GBP will rise to 1.20 per euro according to Standard Bank. The coronavirus pandemic means that the deadline for a trade deal this year could either be pushed back, delaying a risk for the currency, or see more favourable terms given to the U.K.
August was a quiet month for Euro with a sideways price action of the euro versus the US dollar and other majors, such as the Aussie and Canadian dollar. September has the potential to be more volatile, especially due to the upcoming European Central Bank meeting. Europe has come together to provide huge stimulus and grants to countries stricken by the virus but there are suggestions among investors that the rally seen off the back of this positive news may have stalled. In the short term the euro will be susceptible to swings. In the long term there are positive expectations for the currency.
The Great British pound sell-off continues as mounting Brexit fears weigh on the embattled currency. Trade negotiations have stalled heightening fears a “no deal” divorce will eventuate. With risk sentiment faltering and Brexit concerns escalating we expect the pound will remain under pressure as we move toward the self imposed October trade deal deadline.
The GBP to EUR exchange rate jumped to 1.19 in early February when Mark Carney – in his final press conference as Governor of the BoE – stated: “The UK economic performance has not been so far so good, but so far good enough. Although the global economy looks to be recovering, caution is warranted” and “Evidence of a pick-up in growth is not yet widespread.”
GBP/EUR Recent 90-Day Trend
GBP/EUR at 1.0909 is 1.4% below its 90-DAY average, range 1.08 - 1.1265 .
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.
GBP/EUR 10 year historic rates & change to 18-Sep-2020 : 1.0910
Euro in the markets
The euro is currently a more appealing investment than the US dollar as fiscal support and COVID-19 containment open the door to a faster paced recovery than what is likely in the US. With current USD weakness and strong long-term prospects for the European Union, there is speculation that the euro could be a contender as the world’s new reserve currency. In the short term the euro could be susceptible to swings, however in the longterm the euro has very good prospects. The currency is poised to move above 1.1850 and extend toward 1.20 in coming weeks.
In mid-July euro strengthened four-month highs (around 1.15 against the US dollar) as european leaders delivered a difficult agreement on a coronavirus rescue package to help member states manage the economic downturn.
The historic stimulus package will see the bloc issue 750 billion euros (US$860 billion) of joint debt and is seen by market commentators as positive for the euro.
The Euro spent 2019 on a downwards trajectory, starting the year with highs at US1.1550 but then slid all year until October where it bottomed out at US$1.09 on Oct 1, close to long-term lows. Since then it has climbed back over the 1 year average of US1.11 towards US1.20.
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