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Will Sterling Euro exchange rates fall further owing to the Brexit issue and Article 50? (Tom Holian)

Friday, October 21, 2016 23:06
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Sterling Euro exchange rates have had an interesting week with the Pound struggling to make gains even though inflation has shown a rise. Since the Brexit vote back in June Sterling has suffered badly against all major currencies and we are now over 20 cents lower against the single currency and I think we could further losses for Sterling ahead.

Some analysts at Credit Suisse have predicted that we could see GBPEUR rates hit 1.05 soon and GBPUSD rates hit as low as 1.10. The reasons for the predictions are down to the higher possibility of a ‘hard’ rather than a ‘soft’ Brexit.

Since the news that Article 50 will be triggered in March next year Sterling has plummeted against both the Euro and the US Dollar and even positive UK economic data is doing little to lift Sterling’s value. Recently both Bank of England governor Mark Carney and Ben Broadbent have both spoken about the value of the Pound and don’t appear to be too concerned. They have both spoken out saying that the Pound’s value is not their highest priority so to me this signals that we could see an interest rate cut when the Bank of England next meet in November.

Typically when a central bank cuts interest rates this causes the Pound to weaken and I would not be surprised to see this happen next month. Carney also recently spoke out about the previous interest rate cut and claimed that it was a good idea in the wake of the shock caused by the Brexit and therefore again I think we could see further intervention by the Bank of England.

With interest rates at historic lows in the UK the Pound is not offering its previous attractive yields and this is another reason for the decline in the vale of Sterling against the Euro and the US Dollar.

If you’re in the process of buying a property in Europe before Article 50 is triggered in March it may be worth looking at buying a forward contract which allows you to fix an exchange rate for a future. In the last month I have noticed a huge interest in my people buying forward contracts to avoid the uncertainty for Sterling in the months ahead.

Having worked in the foreign exchange industry since 2003 I am confident of being able to offer you competitive rates of exchange when buying or selling Euros so if you have a currency transfer to make and want to save money on exchange rates compared to using your own bank or if you’d like further information then contact me directly and I look forward to hearing from you.

Tom Holian 

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