GBP-EUR Breaks 5 Year High

By Luke Dyson

What a week for sterling: we have seen a significant amount of volatility across the board as tensions between Ukraine and Russia are still high with no clear end in sight just yet.

It is said discussions could be held in Ukraine by Russian negotiators by the end of the week to initiate a ceasefire, but this is doubtful given the extent of the damage that has already been done.

For sterling – euro we have seen some drastic gains being made with the currency pair breaking out and creating a new 5 year high, this is the highest point since July 2016 just surpassing the previous high in December 2019. This market strength is down to a couple of key factors, the main one being the current Ukraine Russia situation weakening the Euro as uncertainty continues to rise with Putin’s threatening behaviour as he mentions nuclear warfare and no remorse for his current actions.

Sterling has rallied following UK bond yields recovering from the sharpest one day fall since the Brexit referendum on Tuesday. Investor sentiment has also shot up with positivity around Ukraine and Russia potentially having a discussion with hopes of coming to an agreement on a ceasefire, whether this happens no one knows but talks of a discussion has fuelled this.

Whilst the current affairs are affecting the market significantly, The UK’s inflation level is seriously high which is detrimental to the strength of sterling. However, an interest rate hike is expected in the coming months which has acted as a buoyancy for sterling and helped keep its baseline strength up.

If you are looking to buy Euros in the coming weeks please consider taking advantage of the current highs, given it is the highest point in the last 5 years it is an excellent buying opportunity amongst what is currently going on in the UK with inflation but also in the world.

To put into perspective how much has been gained for GBP/EUR if you were to buy €150,000 at the beginning of the year compared to where we are now, you would be saving just over £2,000!

Please get in touch with your currency consultant to see what we can do to take advantage of the current rate or if your requirement is pending, we can help to limit your currency risk by getting a strategy in place.

News releases today

10:00 EUR  eurozone retail sales

13:30 USD non farm payrolls

15:00 CAD PMI