- GBPEUR above 1.17
- Economic releases contradict the immediate impact of Brexit vote
- Will the Pound continue its upward trend?
Pound to Euro at 2 week high – Will the trend continue
It was suggested that if the UK left the EU, the immediate impact would shock global markets causing steep declines in activity. This message was reiterated by government at the time – David Cameron and George Osborne.
As it stands, no such global shock has happened, whilst the UK has not official begun its withdrawal from the EU, both the UK and EU have seen its economic data contradict these messages.
Sterling is now at a 2 week high against the Euro, and looks to continue its rally against the Euro following on from positive economic data which paints a much softer impact of the Brexit vote.
That being said, it may take some time for economic releases to show the true implications of Brexit, this lag in data could extend for a number of months. There is an argument therefore that in the short term, Sterling could find further support against its major counterpart.
Will the Pound continue to improve?
I personally believe that GBPEUR exchange rates will continue to improve as long as economic releases contradict post-Brexit doom. Whilst the UK remains in the Eurozone there is still plenty of time for investors to buy into the Pound. It’s plausible that exchange rates could go back up to the 1.19-20 range as long as economic data holds and Article 50 is not scheduled.
This does present a fantastic opportunity for Euro buyers but given the unknown around Article 50, there is no guarantee that these current rates will hold. There has been speculation that Theresa May could look to invoke Article 50 in April next year, whilst other sources claim it could be the latter part of 2017.
Friday’s GDP estimates for Q2 could see further strength for Sterling, the recent positive data that came out of the retail sales will likely boost GDP for Q2.