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5 Reasons The Pound Could Leap Higher Versus The Euro in March 2018

Market Commentary5 Reasons The Pound Could Leap Higher Versus The Euro in March 2018
The pound to euro interbank exchange rate could leap above its current 1.1304 in March 2018, as German chancellor Angela Merkel has encouraged UK prime minister Theresa May to pursue a bespoke Brexit deal. Image credit: Julian K.
The pound to euro interbank exchange rate could leap above its current 1.1304 in March 2018, as German chancellor Angela Merkel has encouraged UK prime minister Theresa May to pursue a bespoke Brexit deal. Image credit: Julian K.

by Peter Lavelle

Welcome to Pure FX’s latest outlook for the pound to euro interbank exchange rate.

This tells you why the pound could strengthen against the euro, looking ahead, for your money transfer!

Sterling may shoot up versus the common currency!

The pound to euro interbank exchange rate has hit 1.1304 today, just a whisker below its highest since February 9th, or 10 days.

What’s more, looking forward, the pound could continue to ascend versus the euro, in March 2018. Here are 5 reasons why:

1. At a press conference last Friday, German chancellor Angela Merkel encouraged UK prime minister Theresa May to pursue a bespoke Brexit deal for the UK.

This may lift the pound, because Mrs. Merkel is Europe’s most powerful politician. Hence, if Mrs. Merkel encourages Mrs. May to pursue a bespoke deal, this points to a positive Brexit outcome!

2. The Financial Times reported last Friday that the UK’s financial services industry will seek “mutual recognition” for its regulations with the EU after Brexit.

This could boost sterling, because if the UK’s financial services industry gets “mutual recognition” with the EU, the UK’s financial services industry will remain extremely strong after Brexit!

3. UK unemployment is forecast to have stayed at a 42-year low of just 4.3% in the 3 months to December, according to financial market forecasts for UK data this week.

This may strengthen the pound, because if UK unemployment stays low, this will tell us that the UK’s labour market remains highly robust, pointing to solid UK GDP growth!

4. There’s a 60% chance that the Bank of England will hike interest rates above their current low of 0.5% by May, according to financial market forecasts.

This could help sterling, because when the Bank of England lifts interest rates, this makes investing in UK assets more profitable, thus boosting demand for the pound!

5. Sterling may rise as much as 20% against the euro over the longer term to reach “fair value”, according to analysts at Swedish firm SEB.

This may lift the pound, because this suggests that sterling could significantly rise against the euro in the coming months, thanks to upbeat Brexit developments and low unemployment!

With all this in mind, the pound to euro interbank exchange rate may rise above its current 1.1304, in March 2018!

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Please bear in mind, this article is Pure FX’s opinion only and does not constitute advice. Moreover, the exchange rates referred to in this article are the interbank rates, which are the rates at which banks and financial institutions buy and sell currency to each other. Therefore these exchange rates cannot be accessed by individuals or SMEs, and are not the same rates that Pure FX can offer. To get a free exchange rate quote, call us on +44 (0) 1494 671800, or email peter.lavelle@purefx.co.uk.

References

1. George Parker and Jim Brunsden, “UK aims to keep financial rules close to EU after Brexit”, February 16th 2018, FT.com, https://www.ft.com/content/52515664-1278-11e8-940e-08320fc2a277
2. Reuters Staff, “Sterling rises versus euro as May meets Merkel in Berlin”, February 16th 2018, Reuters.com, https://www.reuters.com/article/uk-britain-sterling/sterling-rises-versus-euro-as-may-meets-merkel-in-berlin-idUSKCN1G00RO

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