Will Recent EUR Strength Continue? (Matthew Vassallo)

The EUR has made great strides over the past few days, in particular against Sterling. GBP/EUR levels have dropped almost 6 cents in the past month, finally providing EUR sellers with a window of opportunity. This move has been more aggressive than most predicted and despite the Pound finding some support today, following the Bank of England (BoE) interest rate decision and subsequent monetary policy statement, the overriding trend of 2016 has certainly been negative for any clients holding Sterling.

Looking at the current levels I do feel the Pound is likely to find support above 1.30 and I’m not convinced that the EUR has suddenly become an impenetrable object. The single currency had to fight against a wave of market negativity and uncertainty for much of last year and despite most of the key triggers now being removed, or at least swept under the carpet, you still get the sense that further trouble is never far away.

Despite this we cannot hide from the fact the Pound is under considerable pressure and any clients holding out for a return to last year’s highs are likely to be left disappointed. The market conditions will not allow that and unless we see another shift, then in my opinion the days of 1.40 are gone.

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