As Sterling Euro exchange rates remain relatively stable close to some of the highest levels we have seen for years there are a number of key economic data releases due which could create volatility and create the next trend for GBP/EUR exchange rates. This morning at 9:30am we have UK Consumer Price Index (CPI), a measure of inflation, which is expected to show a rise as inflation continues to run high, this may lead to rumours of the need of an interest rate hike to bring inflation back down in line with the Bank of England’s 2% target (although with the current state of the housing market and overall UK economy this is unlikley to happen) and so we could see a Sterling rally if this happens. Tomorrow we have the Bank of England (BoE) minutes due for release at 9:30 and could give an insight into whether the BoE are considering increasing the Quantitative Easing (QE) programme and with Mervyn King, Govenor of the BoE, recently stating that another £100bn will be needed. As we have seen in the past just a mention of QE can weaken Sterling exchange rates so tomorrow morning could give us a good insight into how the Central Bank believe the UK economy is performing and whether more intervention will be needed.
Finally and possibly most importantly, on Thursday we have the audit of the Spanish banking system which should give the markets an idea as to whether the €100bn that was made available to the banks will actually be enough. Currently, no one is quite sure as to the actual state of the Spanish banks and if this audit shows the banks need more than the €100bn we could be looking at a further loss of confidence in Spain and therefore a weakness in Euro exchange rates. In the meantime while all these key data releases are announced Greece are still working towards forming a coalition government and until we know exactly who is involved in the coalition and the plan they have to help get the Greek economy get out of the current mess it is in.
If you need to transfer money abroad and are looking to time your exchange to achieve the best exchange rate make sure you speak to one of our experienced currency brokers. With a number of different contract options available your account manager will be happy to discuss your currency requriements and the market outlook in more detail so you can make an informed decision.