Pound slumps to fresh lows after UK leaves the EU

  • The pound has been on a downtrend for the last couple of weeks, with markets focused on trade negotiations between the UK and European Union following the UK’s exit on 31st January.

    This has seen GBP/EUR plummet from 1.19 to 1.17 and EUR/GBP edge to 0.85.

    Meanwhile, GBP/USD fell from 1.32 to 1.28, and EUR/USD slipped from 1.10 to 1.09.

    Staying on top of the latest currency news can help you time your transfers more effectively, so find out what you should be looking out for over the next couple of weeks…

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    What’s been happening?

    Before the end of January the pound briefly rallied against the euro and US dollar after the Bank of England (BoE) left interest rates on hold. 

    However, Sterling has since given up these gains, with the pound sliding to a two-and-a-half month low against the US dollar, thanks to growing fears the UK and EU will be unable to reach a trade deal before the end of the transition period.

    PM Boris Johnson has so far adopted a hardline stance in trade discussions and appears committed to the transition period ending in December 2020. 

    GBP/EUR losses haven’t been as severe as GBP/USD losses however, with the euro weakened after recent data suggested the German manufacturing slump may have continued after a temporary pick-up in November.

    The US dollar was able to gain some support from rising safe-haven demand as worries surrounding the economic impact of the outbreak of Wuhan coronavirus plagued traders.

    What do you need to look out for?

    The spotlight will remain on UK-EU trade negotiations as the two sides head back to the negotiating table. 

    EUR investors will be looking closely at upcoming data from the bloc’s largest economy, as weak German flash GDP could signal the worst is not over.

    Over the next few weeks the dollar may edge higher if upbeat retail sales data shows the American consumer remains optimistic, and PMI measures continue to impress in February.

     

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