Pound to Euro Outlook: How Will the Pound to Euro Rate Perform This January?

The pound to euro rate entered 2020 on a rather uncertain footing, as the market struggled to fully understand what lies ahead with Brexit negotiations. The UK will leave the EU at the end of the January and enter into the transitional phase which may then open the door to fresh uncertainties relating to the future relationship between the EU and the UK. With the market being forced to continue to price in the potential for a no-deal exit, which has historically seen the pound lose value as it’s likelihood increases, sterling has been under fresh pressure following the strong showing after the UK election, when the pound to euro exchange rate hit 1.2082.

What Events Could Influence GBP/EUR Exchange Rates?

The rest of January will contain all sorts of further news in the market relating to the economic performance of the UK and Europe. Interestingly, both the UK and Germany narrowly escaped recessions in 2019. A key topic of interest for the year ahead will undoubtedly be what lies ahead for the US and China Trade Wars and the knock impact in countries further afield. Looking forward, the Bank of England Interest Rate decision meeting on the 30th January could prove influential, as may the European Central Bank (ECB) Interest Rate decision, due on the 23rd.

Economic policy passed by these Central Banks can naturally influence the currency market. GBP/EUR interbank exchange rates have been as low as 1.0647 back in August 10th 2019, and as high as the 1.2082 just after the UK election 13th December 2019. Whilst the UK election has led to the pound becoming stronger, because the Conservative government was viewed more favourably than the Labour administration by the markets, it might well continue to struggle in the future as the prospect of Brexit and economic uncertainty continues.

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