The EUR continues to trade close to a 5 year high against Sterling, with UK Prime Minister Theresa May’s comments last week regarding the triggering of Article 50 early next year, sapping investor confidence from the Pound.
Whilst this has helped to drive the Euro’s value up to these giddy heights, I’m not convinced that the current trend will continue at the same pace, with Sterling finding some support around the current levels.
We need to consider the possibility that the markets have now factored in many of the negatives surrounding the UK economy and the EUR itself, will not be immune to our Brexit and the subsequent consequences. The EU is losing an integral member and with pressure building on European Central Bank (ECB) president Mario Draghi and other European leaders, we may find that the Euro’s time in the sun is short lived.
Whilst I do not expect the Pound to surge back under current market conditions, I would not be gambling on another major jump for the EUR, especially when we consider recent reports of far right uprisings across Europe. This is particularly in particular in Italy & France, where the far right movement is gaining support almost on a daily basis and with elections in France & Germany next year, the political and economic landscape could change dramatically over the next 12 months. This is highly unlikely to build market confidence in the region and ultimately the single currency will suffer as a result.
Therefore, I would be looking to protect any short to medium-term currency exchanges, by way of a forward contract. This will ensure that the huge gains seen for EUR sellers are protected, ahead of what is likely to be an extremely volatile and defining period for the EU.
If you have an upcoming EUR currency requirement the current levels are a stark reminder as to how important it is to be kept up to speed with key market movements, ahead of any prospective currency exchange. The currency markets can move aggressively and without prior warning and this is where a proactive broker can help you time your trades and maximise your currency transfers.
If you would like to be kept up to date with all the latest market movements, or simply wish to compare our award winning exchange rates with your current provider, then please feel free to contact me on 0044 1494 787 478 and ask one of the team for Matt. Alternatively, I can be emailed directly on email@example.com