The GBP/EUR rate at the end of the week has been dictated by the negotiations between the EU and the UK as talks seem to very slowly be moving forwards. There were rumours this morning that Theresa May was going to announce the UK’s divorce bill could increase from £20bn to £40bn in order to push negotiations along however that doesn’t seem to have happened.
EU Council President Donald Tusk today warned the UK Prime Minister that they have two weeks to move talks on and that the EU are prepared to start negotiations on trade once the “Divorce Bill” is settled. This would be considered positive for Sterling and the sooner the uncertainty is removed regarding a UK trade deal the sooner the Pound is likely to rise. Should the UK and EU come to some form of agreement then I think we could see the Pound rise several percentage points against the single currency.
GBP/EUR rate forecast: the week ahead
There is normally some form of Brexit release over the weekend, with politicians appearing in the Sunday papers. This weekend should be no exception which means we could come into a volatile currency pair come Monday morning.
Next week is fairly quiet for EU data, but on Monday European Central Bank President Mario Draghi will speak which could add to any weekend volatility. Overall next week is likely to be dictated by the Brexit negotiations and how the talks move forward. The GBP/EUR exchange rate has risen above the 1.12 level to close the day and in my opinion, we could start to see the rate move back towards the 1.13 level. Considering this time last week, the rate looked like it might move up towards the 1.14 level a movement back towards 1.13 would not be too surprising.