Is the Best Euro Exchange Rate on the Way?
Since the Great British public voted to leave the European Union in a Brexit Referendum on 23rd June 2016, Sterling has not performed well at all in its currency pairings. In fact, as Britain and the European Union are still battling to thrash out a deal, the British Pound is at present, suffering its worst financial quarter since the 2008 global financial crisis.But is the best euro exchange rate on its way?
Sterling has fallen more than 6 percent against the US Dollar this quarter, more than the 5.4 percent fall seen in the euro dollar exchange rate. Meanwhile, the gbp to euro exchange rate has fallen over 1 percent in the same period.
The heavy declines from the British Pound since Brexit, especially since April this year, have meant purchasing travel money and travelling into the European Union, has been a more expensive experience. British holiday goers have received considerably less for their Sterling than ever before. Pre Brexit, the GBP/EUR exchange rate peaked at 1.4252 on November 1st, 2015. However, since then the gbp to euro exchange rate has been on a steady decline, bottoming out on the 28th August at 1.1011. So, having rallied over the last few days, climbing 0.55 percent to 1.1182 on Friday alone, questions are being asked if the best euro exchange rate between the GBP and EURO, is just around the corner.
How interest rates have effect the pound euro rate
In August, the Bank of England raised interest rates from 0.50 percent to 0.75 percent. However, so far, the desired effect of boosting the British Pound has not really happened in the way the Bank of England would have liked. The bounce in the gbp to euro exchange rate seen over the last few days has been not because of any significant strength in the GBP, but more due to weak Eurozone data and a downturn in the US Dollar. The bad news then for those looking to purchase euros for their travel money, is that the declines in the gbp to euro exchange rate could well continue for the next few weeks at least. However, the good news, is that all signs lead to a reversal in the fortunes of the GBP in the medium and long term, and here’s why:
The Bank of England now look odds-on favourites to raise interest rates again, at least one more time, before the end of the year. The chances are slim that rates will be raised as early as the September meeting, but the markets will look for clues in the Bank of England’s statement as to when rates are to be raised again, (if at all). Should there be anything concrete from the BoE that rates will rise again, we can expect the markets to adjust the gbp to eur exchange rate accordingly, which will see the British Pound increase in value against the Euro.
A big factor in why we are yet to see the best euro exchange rate for GBP is Brexit. The March 2019 deadline to leave the EU is getting closer and closer and with no deal yet to be agreed upon, there is all to play for in the discussion stakes and the GBP would be a huge beneficiary as and when a deal is finally agreed.
So, in short, the recent rallies in the gbp to euro exchange rate have been good and much needed, but the best is yet to come with a brighter future for the GBP ahead, meaning better rates for buying travel money and cheaper European experiences for British travellers.