Pound plunges as UK’s Brexit rhetoric stokes no-deal fears
The start of September brought notable volatility in the currency market, particularly for the pound amidst fresh Brexit jitters.
So far this month we have seen GBP/EUR retreat from 1.12 to 1.10 and EUR/GBP rally to 0.90.
Meanwhile, GBP/USD has collapsed from 1.34 and 1.30, whilst EUR/USD has slipped back to 1.18, having briefly broken through the 1.20 barrier.
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?
The pound has fallen over the past couple of weeks, tumbling from multi-month highs in response to growing tensions between the UK and EU over the terms of a post-Brexit trade deal.
The euro, meanwhile, has retreated from a two-year high as lacklustre EUR data releases and rising European coronavirus cases prompt fears the Eurozone’s economic recovery may already be stalling.
At the same time, after dropping in response to changes to the Federal Reserve’s inflation framework, the US dollar mounted a convincing recovery, fuelled by some upbeat US data.
What do you need to look out for?
Looking ahead, it’s likely the pound will become more volatile in the coming weeks as the noise surrounding Brexit grows increasingly loud, with the rising risk of a no-deal Brexit likely to exert considerable pressure on GBP exchange rates.
EUR investors are likely to be preoccupied by the European Central Bank’s (ECB) latest policy decision, amidst speculation the bank will use the opportunity to talk down the euro on fears its current strength will hinder the Eurozone’s recovery.
Finally, we may see any further upside in the US dollar prove limited as the uncertainty surrounding the upcoming US election starts to drive sentiment.
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