This month the 160,000 Tory members will vote on who they want to be the next Prime Minister and the verdict will be announced on the 23rd July. If the polls are correct and Boris takes over at No. 10, the chances of crashing out of the EU without a deal increases (some analysts are suggesting we’re seeing this partly priced into Sterling exchange rates already), therefore there is an expectation the GBP/EUR exchange rate will face further downward pressure. However if Jeremy Hunt manages to beat the odds and win, the GBP/EUR rate could recover some of the losses it has seen over the last 8 weeks. Overall it is a tricky period to predict exchange rates and it does look like rates will remain fairly range bound (€1.1130’s - €1.1230’s) over the coming week.
Market sentiment for the GBP/EUR rate is on a downward trend at time of writing. Sterling has begun the week weaker after this morning’s weaker than expected GBP data. A small but growing number of global banks are forecasting Sterling exchange rates to move lower in the coming weeks and month, suggesting political uncertainty and a slow down in the UK economy as the major risks for the UK currently. Keys levels to keep an eye out for will be the €1.1180’s If we see the rate move LOWER than this for a sustained amount of time, then the likelihood of the rate moving into the low €1.11’s will be high and a move towards €1.1080’s will be more likely.
GBP/EUR Weekly Outlook 3rd-7th of June + Brexit Update
With PM May on the way out and most likely Boris on the way in, a number of analysts have begun to forecast more pain for Sterling exchange rates. We'll know who the new PM will be by the end of July but speculation and comments from those lined up to replace May will be closely watched for signs that they'll push for a Hard or soft Brexit.