Pound/Euro rises to €1.15

The Pound has had a very strong week, rising every day. The reasons for the gains is the fact that there is more and more optimism that a Brexit deal is going to finally be agreed this week. There are reports that the withdrawal agreement is pretty much complete, and currently being looked at by the ministers. GBP/EUR sits at €1.15 which is pretty close to the best we have seen in 18 months:

GBPEUR1Y

Would a Brexit deal strengthen the Pound further?

This month is key to how the Pound is going to perform in the coming months. If reports are true and a deal is almost complete, then the EU will hold an emergency summit this month to sign it off. If that happens, then I would expect the Pound to rise to new 18 month highs. We have however seen rates reach these levels several times in the last year, only for the Pound to drop away again.

Personally I think a deal will be agreed that could cause the Pound to rise. However, it’s important to remember that markets move on rumour, and the fact that a deal is expected is why the Pound has risen by 3% already this week. A deal may well send Sterling higher, however there is no way to know how much this is already priced in to the market. If and when a deal is announced, a spike in the rate could well be short-lived, and ultimately we might not see a surge in GBP/EUR rates that some expect.

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