Pound to Euro exchange rates have remained firmly under pressure this week and continue to trade close to 1.08 (GBP/EUR) and 1.2150 (GBP/USD). Will the pound continue to remain under pressure?
With much of Europe slowing down for the holidays I wouldn’t expect any significant developments with regards to Brexit until September. For this reason we may see the Pounds short term movements dictated by data releases.
With the on-going Brexit debacle it is easy to forget that the Pounds movements will still react to positive or negative data sets. For example tomorrow will see a series of UK data releases in the form of Gross Domestic Product (GDP), manufacturing and industrial production levels and trade balance figures. Should you have an interest in sterling exchange rates it is important to closely monitor these releases.
What could happen to Pound to Euro exchange rates?
Tomorrow’s data is expected to be be poor. GDP is forecast to fall from 0.5% to 0%. Meaning we are close to contracting as an economy. Manufacturing production is forecast to fall from 0% to -1.1% and industrial production from 1.4% to -0.2%. This doesn’t make for good reading. If the releases are as forecast the pound is set for another downturn. We could easily see GBP/EUR fall into the 1.07s and GBP/USD test 1.21.
This, along with the real chance of a ‘no deal’ Brexit. Analysts are putting the chances at 50-50. The prospects are quite bleak. Should we leave on the 31st October without a deal then most analysts expect parity to be seen GBP/EUR and potentially 1.10 GBP/USD. Scary thoughts.
Are you buying a property overseas? Are you prepared for a ‘no deal’ Brexit?
If you are worried about the Pound falling, then fixing the rate with a ‘Forward Contract’is an option worth considering. It removes your exposure to the volatility and allows you to budget. This is very useful when purchasing property overseas for example.
Those that are less risk averse and think the rate could rise, can consider a Stop Loss order. This instructs your broker to purchase your funds if the rate drops below a pre-agreed level e.g. €1.08. You then have a worst case scenario while still allowing you to take advantage if the rate of exchange moves in your favour.