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Pound Sterling vs Euro Odds

Various factors have left the pound struggling over the past month. The main factors which contributed to poor GBP performance are poor data outlook provided, Article 50 anticipation and Brexit related stuff. We do not for sure what will be situation of the country financially and economically fast forward 2-10 years. We can only speculate based on the current data available.

Currently, UK Economy has been resilient to Brexit related stuffs. The 2nd Half Year 2016 although grew as per the expectations, the UK is getting ready for tantamolous roller coaster ride. The GBP has been weakening these past months due to Article 50. Due to this, consumer product prices will increase leading to low private consumption. The global players will also be reluctant to invest in UK specially due to uncertainty surrounding the policies as a result of Brexit.

Bank of England is likely to play a huge role in the economy now. It has to stabilize the economy with respect to change in business environment. It can be stated with certainty that Bank of England will unlikely make strong monetary policies this time. It will priorities growth this time more among other targets. Bank of England will also be likely to form policies to ease out unemployment opportunities which can be suffered as a result of Brexit.

Taking research reports from various financial houses, the market on average has priced 8 basis points rate hike in 2017 and 22-25 basis points rate hike in 2018. Due to this factor, investors have built up speculative short GBP positions after the Brexit vote.

Uncertainty certainly looms over the relation between UK and the European Union. The value of GBP with respect to Euro is likely to be undervalued in the short as well as medium term. One can also expect the exchange rates to be very volatile during these period.

Once there is future certainty between the relation between the UK and EU, one can expect the UK economy to bounce back and be considered good enough to entice investors back to the Britain.  

Scottish referendum

Most of the scots wanted to stay in the EU but as they are part of UK , they want a referendum. The Scottish parliament is likely to enable Scotland also hold a referendum in between 2018-2019 which would allow Scotland back into EU. However, before the events unfolding likely due to Brexit, the Scotland is unlikely to take any decisions now. The referendum is however more likely due to uncertainty hovering around UK economy as of now. However, it is very early for us to conclude that it will have any impact on GBP/EUR in 2017 and 2018.

Forecast

The target for EUR/GBP can be kept around 0.82 to 0.88. Anything below 0.75 will be huge blow to the UK future economy. For now, the charts show limited scope above 0.9.At the end of 2019, we can expect the GBP/EUR to go above 0.9 which is very likely as until then UK would have stabilized its economy to go forward.

Unibet has odds on Pound Sterling vs Euro 2018 and 2019.