Close to-Time period Pound To Euro Forecast: The place Subsequent For GBP/EUR Charges After Sterling’s Strongest Rally In Over A Decade – Alternate Charges UK


Pound-to-Euro-rate-2

The Pound to Euro exchange rate concluded the week just below the key €1.20 handle, quoted at €1.19835 ahead of the new week. Sterling performed extremely well off the back of the significant Tory win on Thursday December 12, but fell back from best levels seen in 2019 (1.207) as currency markets took profits.

“My view on the pound: I think it can probably rally further on continued short-covering and optimism” says Marshall Gittler, ACLS Global. “But eventually reality will sink in and people will realize that this is only the end of the beginning for Brexit, not the beginning of the end. That’s intensely GBP-negative.

“The big lie here is the idea that with his new majority, Johnson can pass the Withdrawal Agreement, leave the EU on 31 January and that’s the end of Brexit. Hah! Here’s a photo, courtesy of my former colleagues at Deutsche Bank, of the recently concluded EU-Canada trade agreement. You can read its 30 chapters and 30 annexes here, or if you want to download all 1,598 pages as one PDF for easier perusing on the train home, try here.

“Negotiations for this agreement were first announced in May 2009 and concluded five years later in August 2014. The European Parliament finally agreed to it in February 2017. So eight years from start to (almost) finish – the agreement still had to be ratified by national legislatures after that. And now Britain has a year to negotiate a similar agreement with the EU – plus every other country on earth.

The Pound to Euro (GBP/EUR) exchange rate held steady at the beginning of last week after the Conservatives continued to lead the opinion polls ahead of the 12th December general election.

This followed reports from the Survation study for Good Morning Britain, which suggested that the Tories were headed for a 14-percentage point lead ahead of the Labour Party.

Elsa Lignos, Global Head of Strategy at RBC Capital Markets, said:

‘GBP is rallying again after markets all but fully discount a good Tory majority, ignoring the high number of undecided voters.’

Pound Sterling continued to remain steady on Tuesday in spite of the UK’s GDP figure for October falling to a worse-than-expected 0% due to Brexit uncertainty a slowing global economy.

A spokesperson at the Office for National Statistics (ONS) commented:

‘The UK economy saw no growth in the latest three months. There were increases across the services sector, offset by falls in manufacturing with factories continuing the weak performance seen since April.’

Thursday saw the GBP/EUR exchange rate soar to a three-year high after the Conservative Party secured a 365 to 203 majority against the Labour Party in the general election.

However, the Pound began to lose some of its gains against the single currency on Friday as GBP/EUR sank from its post-referendum highs.

EUR/GBP Exchange Rate Sinks on Eurozone’s Economic Woes

The Euro-to-Pound exchange rate struggled to gain against Sterling on Monday in spite of the release of Germany’s Trade Balance figure for October, which beat forecasts and rose to €20.6 billion.

The report showed that Germany’s exports had surprisingly improved, despite a global economic slowdown and uncertainty over US-China trade relations.

Claus Vistesen, Chief Eurozone Economist at Pantheon Macroeconomics, added a note of caution, however:

‘The monthly data have been a poor guide to the quarterly GDP numbers this year, so we are less certain than usual about the underlying trend; at the very least, we need to see more data, especially on import and export prices, which usually are a key driver of the deflated GDP net trade data.

Tuesday also saw the French Industrial Output figure for October beat forecasts and rise to 0.4%.

This was followed by Germany’s ZEW Survey into Economic Sentiment, which also beat forecasts and rose from -2.1 to 10.7, although this failed to provide much uplift for the EUR/GBP exchange rate.

The Euro (EUR) fell on Wednesday after the Moody’s Investors Services downgraded their economic growth outlook for the Eurozone.

Moody’s said in its statement:

‘Outlook for Euro-area banks is negative as economic slowdown, continued accommodative monetary policy will erode already weak profitability.

‘If trade tensions escalate, between the US and China or US and EU, there would be a bigger deterioration in European banks.’

Meanwhile, Thursday saw the European Central Bank (ECB) hold its interest rates at 0% under its newly-appointed President, Christine Lagarde.

Mrs Lagarde provided a glimmer of hope for the Eurozone’s flagging economy, however, commented that the economic picture had shown ‘some initial signs of stabilisation in the growth slowdown’.

The EUR/GBP exchange rate edged higher on Friday as European leaders braced for the UK’s Brexit after British Prime Minister Boris Johnson’s election victory landslide.

Charles Michael, the new President of the European Council, said:

‘We expect as soon as possible a vote by the British parliament on the withdrawal agreement. It is important to have the clarity as soon as possible. We are ready. The EU will negotiate to ensure to have a close cooperation in the future with the UK.’

GBP/EUR Exchange Rate Outlook: Conservatives’ Next Steps in Focus

Pound Sterling investors will be looking ahead to Monday’s release of the UK Markit Services PMI figure for December, with any signs of it emerging out of contraction territory proving GBP-positive.

Monday will also see the release of Germany’s Markit Manufacturing PMI for December, which could provide some uplift for the EUR/GBP exchange rate if it shows any signs of improvement.

The UK’s ILO Unemployment Rate figure for October will also be in focus on Tuesday, with the figure expected to rise from 3.8% to 3.9%.

President of the ECB, Christina Lagarde, is also due to deliver a speech on Wednesday, with any indications of a dovish take on the Eurozone’s economy likely to weaken market confidence in the Euro.

Thursday’s Bank of England (BoE) interest rate decision will also be in focus next week, with the bank expected to hold its interest rates at 0.75%.

UK political developments will continue to drive the GBP/EUR exchange rate next week, with markets bracing for the Conservative’s Party’s next steps over Brexit, which the party has promised will be delivered by the 31st January.

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