• Kim Eeles

POUND TO EURO NEWS

Will the Pound get stronger in 2022?

Here are the key factors driving Pound to Euro forecasts in 2022:

  • The UK economy is expected to recover faster from COVID than the Eurozone

  • The Bank of England is expected to raise interest rates faster than the European Central Bank (ECB)

  • The concerns over Brexit have reduced for the Pound

  • The Ukraine invasion has added risks to the Euro

All these factors are considered positive for the Pound relative to the Euro.

Put simply, the UK is expected to have higher economic growth, tighter monetary policy and less geopolitical risk than the European Union.

If these core themes continue, then you would expect the GBP to Euro rate to continue rising in 2022.

It is worth noting that unknown and unforeseeable event can derail even the best analysis.

It’s why you often hear analysts refer to their ‘base case’.

There’s always the possibility that something significant comes along in 2022 that is not presently known.

These co called ‘black swan’ events can catch the market by surprise and lead to substantial shifts in exchange rates.

The point is absolute certainty is not something that anyone can provide.

Forecasting exchange rates is really about probability. You make an informed judgement based on what is presently known or what can be reasonably anticipated.

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