Olivier and Mann – The pound sterling and the euro are predicted to reach equality next year at around $1.25 according to recent forecasts from a leading investment bank.
If the euro and pound reach parity, it would be the first time this has happened since the launch of the euro in 1999.
Up until now, the pound has been much stronger than the euro but the fallout following the Brexit referendum has caused it to slip considerably and is currently trading at just below €1.08, a long way short of its high of €1.44 in summer 2015.
Since then, the pound has seen a gradual slide against the dollar and Brexit has only exacerbated this trend.
On one side of the English Channel, over recent weeks and months, economic prospects have shown positive signs of growth, with the overall eurozone economy recording its highest manufacturing performance for more than six years, even with the service sector not performing so well. In Britain, the Bank of England has reduced its own forecast for growth from 1.9 to 1.7 percent for the remainder of this year. Revising the inflation target also, the Bank of England expects inflation levels are now likely to reach higher than three per cent against earlier forecasts of just 2 percent.
Uncertainty over the final outcome of the Brexit discussions continues to cause a lot of uncertainty for the UK and is delaying or even preventing further corporate investment decisions being made as everyone waits to see how it all unravels.
Sterling did experience a short-lived rally earlier in the week following on the from the announcement of better than predicted UK services data.
Since the Brexit referendum in the summer of last year, the pound has slipped back more than fifteen per cent against the US dollar and by more than 13 percent against the euro.