Pound/Euro rates hit €1.2050 overnight after Italy lost the referendum and their Prime Minister Matteo Renzi resigned. It didn't last long however and rates have since come back down to below where they were last week, just below €1.19:
What has caused the volatility in GBP/EUR rates?
The result wasn't much of a surprise, but the fact nearly 60% of people voted 'No' was a surprise. The Euro weakened on the back of the news and became cheaper to buy, pushing the GBP/EUR rates above €1.20.
The move was largely priced in to the market already and that's why after a brief spike, investors decided that they weren't going to sell the Euro in droves and the market has settled down at around the €1.19 mark. The fact that the Austrian election at the weekend saw a defeat for the far right has also calmed the markets and given the Euro a little more support.
All in all the current levels are still very attractive for those that need to buy Euros, having risen from lows of €1.10 in November. Going forwards, there are still some important events that will keep this currency pair volatile. Next year there are elections in France and Germany that could cause further Euro uncertainty, however any gains are likely to be limited. The reason the Pound was weak remains; uncertainty due to what will happen in EU negotiations next year when article 50 is invoked.
Will Pound/Euro rates go up or down in the next 6 months?
This is a very tricky one to forsee. On the one hand the Euro may weaken due to political uncertainty in Europe and push Pound/Euro rates up. On the other hand, the Pound may also weaken due to political uncertainty in the UK due to Brexit. So in the coming months, GBP/EUR rates are going to be driven by a political tug of war in Europe and the UK, and this make it impossible to predict how the market will react and what direction GBP/EUR may move in the coming months.
While nobody can predict the market, what you can do is take a pro-active approach to any currency transfer you need to make in the next 6 months, regardless whether you need to convert Pounds to Euros or vice-versa. We have various contract types such as Forward Contracts, Stop Loss orders and Limit orders, which help you avoid currency fluctuations and help you make the most of your currency.
If you have an upcoming currency transfer, then get in touch to get a quote and find out more about the contract types we offer and how they may be of use.
Labels: Best Exchange Rates, effect on Pound/Euro, Foreign Exchange Forecast, Italian election, Will Pound/Euro go up or down