Will Deutsche Bank cause an issue for Sterling Euro exchange rates? (Tom Holian)

Deutsche Bank has been reportedly issued with a fine of US$14bn by the US Department of Justice owing to the mis-selling of mortgage backed securities during the financial crisis. On Friday the share price plummeted as various hedge funds sold their positions with the bank but the share price rebounded by 14%.

Rumours are that the German bank are looking to settle for US$5.4bn which is clearly much less than the DoJ originally wanted but this has seemingly settled the currency markets. The potential threat is that if the bank had to go to the European Central Bank in the form of a bailout this could open a can of worms as other banks within the Eurozone would likely do the same.

However, as Deutsche Bank should be able to pay this off by itself this has meant the impact on GBPEUR exchange rates has been limited.

The issue for Sterling and the reason why it will struggle to make any real gains vs the single currency in the short term is the uncertainty caused by the lack of assurances as to when Article 50 may be triggered.

Foreign Minister Boris Johnson stated recently that the UK is looking at starting the negotiations early next year but as yet there has been no official announcement by UK government.

This weekend 4 senior Tory party members have reportedly handed Theresa May a route map calling on her to speed up the Brexit.

Sterling Euro exchange rates are still very close to 3 year lows caused by the uncertainty of our relationship with the European Union and until we get some form of timeline as to when the negotiations may start then we could see Sterling struggle to make gains vs the single currency.

If you’re in the process of buying a property in Europe and are worried about what may happen over the next few weeks then it may be worth looking at buying a forward contract which allows you to fix an exchange rate for a future date for a small deposit.

To find out more or if you would like a free quote when converting between Sterling and Euro and would like to save money on exchange rates compared to suing your own bank then contact me directly for a free quote. Tom Holian [email protected]

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