We have not seen GBPEUR exchange rates above the 1.40 mark since the beginning of December 2015 and despite mixed economic data for the UK and the Eurozone alike, Sterling continues its downward spiral against the Euro and very little appears to be changing anytime soon.
The Market was spooked on Monday following a Treasury report suggesting UK GDP would be 6% worse off by 2030 in the event the UK were to leave the EU. The Pound recovered from an initial drop prompting traders to take the stance that British people may well be waking up and swinging to the ‘stay’ zone.
This was further strengthened by a telephone poll conducted by the Telegraph which appears to project a stronger ‘stay’ vote by 9 points, giving investors a slight glimmer of confidence.
On the flip side, the Greece crisis has produced fresh concerns following this morning’s current account data, which pitches Greece falling further into debt. Given that further debt relief will be put on hold until Greece can meet its austerity promises, the Euro fell against Sterling putting GBPEUR exchange rates back up to 1.27, rates not seen in almost a month.
ECB Interest Rate Decision today
Today sees yet another Interest rate decision from the ECB which is expected to produce volatility for the single currency. President Mario Draghi could well down-talk the currency and lower interest rates in an effort to boost spending giving GBPEUR a further push in the right direction. This of course weighs heavily on UK retail sales and public spending figures which, depending on the outcome, could push GBPEUR rates to a month high. Realistically however, are we likely to see rates grow to that seen in December 2015?
Pre-Referendum GBP/EUR rates to weaken?
Although it is unlikely we will see exchange rates reach the 1.35-mark pre-referendum, its looking more likely that rates will remain quite stagnant on the assumption that further fear mongering campaigns are pushed onto the British people. The more confidence in a ‘stay’ vote should equate to a stronger Sterling prior to the referendum deadline and with the government pushing ‘stay’ leaflets through the doors of millions of homeowners, we can expect the ‘stay’ agenda to probably look stronger in the run up to the referendum. further with the run up to the referendum.