GBPEUR declines due to Brexit uncertainties and the UK’s credit rating
The Pound drops almost 1% against a host of major currencies overnight as technical support levels are in reach after a recent run of Sterling growth over the last couple of weeks. I can understand The Pound losing some of the gains against most currencies but against The Euro?? It doesn’t make sense. With the Eurozone going into a third lockdown, the economic recovery seems a lot further away. With continued neglect regarding the vaccine rollout, I was hoping to see GBPEUR at 1.20, but we are currently way off at circa 1.16-1.17 range. Further uncertainties surrounding the Brexit deal is likely to be the biggest factor in the GBPEUR cross along with Moody’s downgrade of the UK’s credit rating.
USD weakness expected in near future
Regarding the US Dollar, expect to see some weakness shortly as The Federal Reserve continues to print money to pay for Bonds. Extending the bank’s bond-buying scheme and refraining from any tapering will ignite weakness in the greenback. The European Central Bank has expressed growing concerns about the recent support for the Euro and has blamed The Fed – Suggesting the ECB may cut interest rates further into negative territory, something The Fed has so far said they are unwilling to do.
Sterling looks for support – Beer helps, sometimes
With tensions being raised across all four corners of the globe, the Great British public embraces the end of winter sun. A bit like currency trading ranges, we see temperatures between minus 4 and 20 degrees Celsius in just a few days. One thing to keep an eye on, though; in 4 days, 15 hours and 17 seconds (at the time of writing this), the UK can visit a beer garden with five friends, so that’s something to look forward to.