After the Brexit deal was agreed we saw a timid rise in GBP/EUR which nearly reached 1.12 on Christmas Eve. Soon after, the rate dropped to levels of 1.10 where it has remained for most of the festive period.
So why has the move been so modest? And what are we to expect in the next couple of months?
Experts have pointed several factors to explain the fall of the pound after the Brexit deal.
Some of them have focussed on the actual content of the deal and the implications for the UK economy. The deal does not cover financial services or secure frictionless trade. Therefore, there are worries about the consequences that this might have for the City and its current status, and that the deal is in no way optimal for the UK.
Another obstacle on the pounds rise had been the recent surge of COVID-19 in the UK, with new strains that have led to tiers being increased nationally. The situation is still to be controlled and further measures are expected to be implemented which could continue damaging the UK economy and its recovery.
It is difficult to forecast how things are going to pan out for the UK economy and the pound. Aside from COVID, the new circumstances created by finally leaving the EU will certainly create some challenges for the country.
Whilst we are expecting a quiet week on economic data release, the return of traders in London might spike some activity that could bring some volatility to the markets.
As for the months to come, the UK economy and the pound will be mainly rallying on the control of COVID and the success of the vaccination campaign as the true effects of the Brexit deal will start unravelling.
Let’s not forget that in Europe the coronavirus situation is also worrying and if it were to worsen that could also impact the Euro, which could level things up with for the GBP/EUR rate.
For those needing to make exchange funds the current volatility can be overwhelming so it is more important than ever to get some expert guidance.
Opening an account with a foreign exchange specialist like moneycorp will give you access to free expert guidance and currency tools to monitor the market considering your circumstances, from your budget to your deadlines and your attitude to risk. Furthermore, opening an account doesn’t involve any cost or obligation.
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