GBP Exchange Rate Remains Unstable

The UK pound sterling (GBP) is projected to remain volatile as British citizens cast their votes this year. Given this political situation, the GBP/EUR exchange rate will definitely remain shaky these coming months.

According to research made by HIFX currency broker, the rate of GBP versus EUR increased in terms of volatility by 40 percent during the previous seven general polls.

Instability was the highest in 2010 as it soared to 156 percent when the coalition government came to power. Meanwhile, the pair of EUR and GBP was trading 0.42 percent higher day-to-day at 0.7148. On the other hand, the pair of EUR and USD traded higher at 0.87 percent on a daily basis.

On the other hand, outlook for the common currency exchange rate is expected to be undercut as demands of investors for currency hedges remains higher.

Insignificant data in the Euro Zone allowed the euro some room for recovery.

The German DAX touched new records due to increasing demand for Euro area stocks which is seen as key for further weakness of the EU currency.

At the same time the head analyst for markets at Danske Bank said demand of global investors to hedge their exposure to assets in Europe will pave the way for a lower EU currency.

Momentum continues to be lower in EUR and USD with the cross reaching 1.05 within the week.

Negative euro rate along with excess liquidity is expected to drive traders to risky assets like euro stocks and peripheral bonds.