The euro to pound sterling exchange rate (EUR/GBP) has been on the rise in recent weeks, and according to analysts at TDS (Toronto Dominion Securities), there may be further topside to come. This is due to developing growth risks that could lead to a delay in further rate hikes by the Bank of England (BoE).
The BoE has already raised interest rates twice since November 2017, with the most recent hike taking place in August 2018. However, TDS analysts believe that the central bank may hold off on further rate hikes due to concerns about the impact of Brexit on the UK economy.
Brexit negotiations have been ongoing for over two years now, and with just a few months left until the UK is set to leave the European Union, there is still a great deal of uncertainty surrounding the future relationship between the two entities. This uncertainty has led to a slowdown in business investment and consumer spending, which could ultimately lead to slower economic growth.
TDS analysts believe that this slower growth could prompt the BoE to delay further rate hikes, which would make the pound less attractive to investors. This, in turn, could lead to a further rise in the EUR/GBP exchange rate.
However, it’s worth noting that there are other factors at play that could impact the EUR/GBP exchange rate. For example, the European Central Bank (ECB) is set to end its quantitative easing program at the end of this year, which could lead to a stronger euro. Additionally, any progress in Brexit negotiations could also impact the exchange rate.
Overall, while TDS analysts suggest that there may be further topside for EUR/GBP due to developing growth risks and potential delays in further rate hikes by the BoE, it’s important to keep an eye on other factors that could impact the exchange rate. As always, investors should stay informed and be prepared for any potential changes in the market.
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- Source: Plato Data Intelligence.
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