For only the second time this year the GBP/EUR rate has breached 1.15 today, providing a fantastic opportunity for the Brits that are buying properties in Europe at present.
With limited data releases for the UK and the EU today, arguably the reasoning for the improvement in exchange rates, comes from recent developments surrounding Brexit and the commentary from the Bank of England (BoE) and the potential of an interest rate hike in May.
Brexit transition deal positive for Pound
A few weeks ago now, UK Prime Minister Theresa May agreed a transitional deal with the EU which will start on March 29th and run for 21 months. To finalise a deal many people within politics believe she gave away more than she wanted as she gave full rights to EU citizens that enter the UK within the transitional period.
Mark Carney’s due to speak on Thursday
The commentary coming from the Bank of England is that an interest rate hike could occur as early as May this year. This has led to investment re-entering the Pound which has caused the Pound to increase in value against most of the major currencies. All eyes now turn to Governor of the Bank of England Mark Carney’s speech on Thursday afternoon. Mar Carney has the ability to cause major fluctuations with GBP exchange rates.
With the Pound gaining in value, foreign currency buyers have something to smile about however I think this improvement could be coming to an end. Over the last 18 months, any time the UK start to negotiate an element of Brexit the Pound comes under pressure as the negotiations don’t go to plan and I expect this trend to continue. Arguably the most important aspect of the Brexit deal is the trade relationship between the UK and the EU, and as yet this is to be discussed, therefore this could cause the most amount of volatility for the GBP/EUR exchange rate.
For foreign currency buyers the recent surge in Sterling value is certainly an opportunity and one that should be considered.