HSBC forecast pound vs Euro FX rates will go lower: Anybody hoping to see a stronger rate for the Pound against the Euro is likely to be disappointed according to David Bloom, head of foreign exchange research at HSBC.
He said current levels for the market are likely to be maintained until some real news is apparent on Brexit. Adding that the exchange rate was maintaining itself: “in the tightest range you can possibly get in foreign exchange” and ultimately there won’t be any excitements on the market until a deal is announced. HSBC believes that when the exchange rate does break out it will be on the downside for sterling.
GBP/EUR Rate Predictions
Dominic Bunning, a senior FX strategist with HSBC, commented that the raised political tensions around the UK withdrawal from the EU and the transition agreement are: “unlikely to ease; we see GBP-USD falling to 1.34 this year and EUR-GBP rising to 0.93“. If the Euro to sterling rate does rise to 0.93 this will give sterling to Euro exchange rates of 1.0750.
At the moment the Pound to Euro exchange rate is in the middle of a long-term range not experienced since September 2017 – following on from the sharp speculative decreases experienced through July and August 2017. Since picking up last September the rates have really done nothing.
Facts Not Speculation
Viraj Patel, an analyst with ING Bank, feels that speculative moves apparent in 2017 are being avoided this year. He told clients in a newsletter that “it’s clear the weak and almost ‘half-life’ like Pound is looking for any positive reason to transform into a better version of itself, with the currency’s resilience of late indicative of a different Brexit trading environment relative to the more dystopian-like one observed over 2017“. He added part of the reason for this is that GBP investors are “opting to trade off Brexit facts rather than Brexit speculation“.
Bank of England hints at raising UK interest levels sooner than initially anticipated have helped support the Pound through the end of February and beginning of March 2018, following the release of a draft legal by the EU concerning conditions of the UK withdrawal from the EU which initially caused drops.