You’ll need to be very determined to see anything positive over the past month. But GBP has recorded a steady strengthening of nearly 10% against EUR and only slightly less against the USD.
We’re now at a rate well above the average for the past three years and well worth locking in with a forward contract.
Analysts seem to enjoy worrying about the potential for GBP/EUR, but they have some justification at the moment. Looking at coronavirus infection rates, the UK appears to be a couple of weeks behind the worst affected eurozone countries. While lockdowns are beginning, slowly, to be lifted in countries like Germany, Spain and Italy, the UK’s show no end in sight.
The EU is also getting its act together in helping its worst affected countries financially. Spain and Italy are wary of being forced into a financial straight-jacket like Greece was after the financial crisis, but the money is being made available and that should support the euro.
On sterling, discussion by City analysts is less about when the pound will drop and more about how far. Will it, for example, drop to levels last seen in 2008, where GBP/EUR was close to parity?
Yes, according to several. We’re launching our new Quarterly Forecasts this week – we’ll send an email explaining how to download yours. As well as the forecasts from individual financial institutions, it shows an average across the financial world for the three, six and 12 month period.
We cannot take anything for granted, least of all that today’s rate will last until midweek. It has already began to drop this morning.
Please do call your trader on 020 8108 5337.
