GBP/EUR Exchange Rate Slumps as Brexit Jitters Grow
The Pound Euro (GBP/EUR) exchange rate struck a new 11-month low this morning, with markets increasingly shying away from Sterling amid rising Brexit uncertainty.
At the time of writing GBP/EUR exchange rate is sitting close to the day’s opening levels, having seen a slight pick-up since striking an 11-month low earlier this morning.
Pound (GBP) to Face Further Losses as Brexit Draws Closer?
The Pound (GBP) has been battered over the last fourth months, being driven ever lower as markets sentiment continues to be undermined by Brexit uncertainty.
However the drop in Sterling appears to have really escalated in August as these Brexit concerns have been accentuated by forecasts that the UK could be hurtling towards a no-deal Brexit, with repeated warnings from within the government over the past couple of weeks.
This is seen as the worst case scenario by markets, who fear that crashing out of the EU could have dire consequences for the UK economy.
Fueling these concerns this week has been the publication of the UK government’s no-deal papers, detailing how people and businesses may be impacted should the two sides fail to strike a deal.
This was then followed by an extremely bleak outlook from Chancellor Philip Hammond, who in a letter published on the Treasury website warned that a no-deal Brexit could result in a 7.7% loss to GDP over the next 15 years.
so Philip Hammond has chosen today of all days to remind everyone that Treasury believes no-deal would crash the UK economy by nearly 8% and leave borrowing £80bn a year higher pic.twitter.com/W6dA1dQ4Pm
— Jim Pickard (@PickardJE) August 23, 2018
While both the UK and EU have stated that they wish to avoid a no-deal Brexit, time is quickly running out for a deal to be agreed before the UK formally leaves the EU in March, something which is not lost on GBP investors.
This could see the Pound continue to soften over the coming week’s unless markets begin to see some positive progress in talks.
GBP/EUR Exchange Rate Forecast: Will Fall in Eurozone Unemployment Bolster the Euro
Looking ahead to next week’s session, the Pound Euro (GBP/EUR) exchange rate could face further losses should the single currency be strengthened by an expected fall in the Eurozone unemployment rate.
Meanwhile some thin trading due to the closure of UK markets for the bank holiday at the start of the session as well as the absence of any notable domestic data could also pressure the Pound next week, especially if investors remain focused on Brexit.
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