Analysts Concerned About The Sterling Pound More Than The Euro

Analysts Concerned About The Sterling Pound More Than The Euro - Euro and GB pound banknotes
Bill Cascade   NEW 28/06/2019 00:00:00 Forex

The Sterling Pound’s performance look’s bleak following the release of analyst sentiments which revealed that they anticipate a sharp decline in the value of the currency. 

Analysts believe that the GBP will drop to price levels previously seen in 2017, which means that they anticipate a far worse performance from the Sterling than from the Euro. The analyst expectation is based on the Brexit issue, which has weighed down heavily on the GBP and also on the Euro.

JPMorgan Chase & Co (NYSE: JPM) estimates that the GBP’s value will approach the 92 pence per Euro range before the end of 2019. That estimate is just 3% shy of the current levels which have not been experienced for more than two years.

Meanwhile, traders have been busy placing bets against the GBP and the last time this many bets against the currency happened was in April this year.

EUR/GBP Forex Chart


Britain’s next Prime Minister’s stance on the Brexit issue will influence the GBP’s performance

The GBP faces more risks especially with the British Prime Minister position up for grabs after Theresa May’s exit. The higher risk levels have resulted in a lower value for the GBP against the Euro. The currency is also under a lot of pressure as May’s Brexit deadline set for October rapidly counts down.

The issue of May’s successor is one that investors are not taking lightly. Boris Johnson is one of the candidates highly likely to take over the position, but this is not of much importance to the traders. The markets are eager to know the next Prime Minister’s stance on the Brexit issue. This is because the Prime Minister’s approach will determine the GBP’s future performance.

The Euro’s bearish performance highlights investor concerns about how the Bank of England intends to handle interest rates. The Bank of England is inclined towards increasing interest rates to maintain economic growth alongside the forecasts.

Markets are also reacting to the slowed trade around the world by adjusting their pricing in line with expectations of a rate cut in by the Bank of England possibly in 2020.

Timothy Graf, who is in charge of EMEA macro strategy for Europe at State Street Bank & Trust, pointed out that the Sterling Pound has a lot of downsides. He added that the Bank of England has been too optimistic at a time when almost all the central banks across the world except Norway have been gravitating towards easier policies.

GBP continues to take a hit and will likely continue on the same path

The GBP has so far dropped by roughly 4% since early April. Its value on Monday hovered at around 89.50 pence per Euro.

Euro-sterling risk reversals measured at six-month intervals are used to determine market positioning and sentiments. They have been shifting more and more in favor of the Euro since the start of May. This indicates that more investors have doubled down on their bets against the GBP.

Jeremy Stretch of the Canadian Imperial Bank of Commerce believes that traders are likely to continue taking short positions against the GBP compared to those of the Euro. Stretch believes that the GBP will reach 91.50 pence per Euro before the end of the year.




More articles

US Dollar Under Pressure On Weak Economic Data

Bill Cascade   NEW 09/10/2019 00:00:00 Forex

The US dollar is struggling for direction, having lost momentum on weak employment data. The greenback has registered impressive gains, in recent months, as other majors currencies continued to edge lower...

Buy to Open Definition, Explained in Detail with Example

Bill Cascade   NEW 08/10/2019 00:00:00 Guides

There are four types of options that are commonly used in the industry. Alongside buy to open, these include buy to close, sell to open and sell to close. Here we look at precisely what the basic definition of buy to open means, alongside offering an example of it at work. By analyzing the term further, we can provide a better understanding...

Swiss Franc Eyes Fresh Gains On Safe Haven Appeal

Bill Cascade   NEW 07/10/2019 00:00:00 Forex

The Swiss franc has lost some ground against other major currencies in recent trading sessions. For starters, it is trading at two-week lows against the Euro, which has tumbled to two-year lows in recent months. While the weakness of the Swiss franc stems from weak economic data, a bounce-back could be in the offing going forward...

Turkish Lira On The Recovery As Swedish Krona Woes Persist

Bill Cascade   NEW 06/10/2019 00:00:00 Forex

Turkey's government remains optimistic about the Lira appreciation, against the dollar, over the next three years. Economic forecasts by the finance ministry indicate the government expects the country’s economy to expand by 5% next year...

Argentines Turn To the Polls To Avert Economic Crisis And Peso Volatility

Bill Cascade   NEW 03/10/2019 00:00:00 Finance

The country is struggling with one of the highest levels of inflation at 54%. High inflation levels have affected the way of life, as prices of goods continue to rise, and small businesses struggle to remain afloat... 

Free margin - Credit