GBP/EUR has fallen through the 1.10 level for the first time since September 2017 and brings the recent falls for sterling to nearly 2.5% in the month of August.
Although sterling has been on the back foot in recent weeks much of the movements seem to be EUR based as we have seen EUR/USD push back through the 1.17 level this afternoon and the pound has posted gains against the US dollar throughout the course of the day.
What is in store for the pound?
This recent trend for sterling against the euro is worrying. It is the first time the pound has fallen through the 1.10 level in nearly a year. This 1.10 level is somewhat of psychological barrier and if the pound remains consistently below 1.10 for the next few days, then a further move downwards could easily happen. Theresa May has attempted to cool the market regarding Brexit, suggesting a ‘no deal’ could be better than a ‘bad deal’ – but how did the market interpret these comments? In one word ‘poorly’. Either of these scenarios will not be good for the pound and, in my view, there is a real possibility further moves towards parity as Brexit problems rumble on.
What data is important this week?
This week is relatively quiet from the pounds point of view. with the majority of the key data coming form the Euro Zone and US. Should you have an interest in these respective currencies then Wednesday is the key day for the US dollar with the release of the US Gross Domestic Product (GDP) data. A slight fall is expected which could cause USD weakness at 13:30. For those looking at the euro then Thursday and Friday may see the greatest movement. On Thursday look out for Euro Zone industrial and consumer confidence data at 10:00 followed on Friday with the unemployment rate and inflation data, both at 10.
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