Since the introduction of the Euro, in the history of the currency pair between the single currency and the British Pound, its value has only been on a side channel for the same duration as the current one, that is, approximately four years. Between 2003 and 2007, the EUR/GBP traded between €0.66 and €0.72, therefore in a low volatility channel, in the order of 10%, interestingly the same fluctuation measure with which it has been trading since 2016 until the date, when its value ranged between €0.83 and €0.92, that is, in recent years investors have been waiting for the outcome of the soap opera Brexit without giving much meaning to the currency pair, something that may be ending in the same time as the deadline for a friendly agreement between the two former partners, the United Kingdom and the European Union.
The lateral consolidation gave way to an active Bull market 13 years ago, which took it from €0.66 to €0.96 in January 2009, the historic maximum of EUR/GBP, but will this year consolidate these years? Will it give rise to a broad movement? Well, for now if it is not a hard Brexit the two currencies may maintain a similar level of value, however if the dividend is not friendly it is likely that there is an imbalance of forces and the currency pair will tend to one side, staying whether in the direction of appreciation of the Pound or the Euro, it is not certain at this stage whether in the medium term the United Kingdom will lose or gain from the separation and its greater freedom to decide the fate of the economy, however it should be noted that considering that the European market will continue to be one of the main destinations for UK exports, there will certainly be rules similar to those existing for the entry of these products and services within the European space.
Whatever the outcome, caution is advised as volatility may rise sharply in the coming months.
