GBP/EUR Exchange Rate Struggles as Brexit Remains in Focus
The Pound Euro (GBP/EUR) exchange rate continues to trade dangerously close to an 11-month low this week as ongoing concerns over the lack of Brexit progress being made continues to hound Sterling sentiment.
At the time of writing GBP/EUR exchange rate is virtually unchanged from this morning’s opening levels, having fallen back after rising on Monday.
Pound (GBP) Exchange Rates Beholden to Brexit Developments
The Pound (GBP) has had a terrible summer, far from basking in the glorious sun that the UK has enjoyed, Sterling has plummeted against both the Euro (EUR) and US Dollar (USD) and striking its worst levels of the year along the way.
This comes despite the Bank of England (BoE) raising interest rates above 0.5% for the first time in over nine years, something which would normally help to spur demand for the Pound.
Of course the elephant in the room here is Brexit, with the Pound facing considerable headwinds as investors becoming increasingly nervous that the UK is hurtling towards a no-deal Brexit.
As we enter the final few months before the UK formally leaves the EU, the lack of progress in talks between the UK and EU is becoming increasingly distressing to GBP investors.
Barring any positive developments in talks this downtrend in the Pound is likely to persist for the foreseeable future.
Subdued Eurozone PMIs Could Pressure Euro (EUR) Exchange Rates
Meanwhile the Euro (EUR) could face some short-term losses this week, following the publication of the Eurozone’s latest PMI reading.
Economists are forecasting that while activity in the bloc’s private sector will have ticked slightly higher this month, overall growth is still expected to remain broadly subdued.
Should this prove to be the case then it is likely it will lead to the Euro giving up ground later this week.
GBP/EUR Exchange Rate Long-Term Forecast: Can the UK Strike a Brexit Deal Before EU Summit?
Looking further ahead, any upside in the Pound Euro (GBP/EUR) exchange rate is likely to be dependent on Theresa May managing to reach a Brexit agreement ahead of the next major EU summit in October
This leaves just a couple of months for the PM to strike a deal with the EU, after which it looks almost certain that the UK will crash out of Brexit without a deal when it formally leaves in March, something which is seen as a worst case scenario by many investors.
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