GBP EUR Hits 1.20 As ECB Cuts Rates
Yesterday the European Central Bank (ECB) cut interest rates to a record low of 0.25% in a move that was before the announcement only an outside chance. As a result of this unexpected move we saw Sterling exchange rates push up over the major level of 1.20, however by the end of trading the rates had fallen back below this critical level. Following the interest rate announcement President of the ECB Mario Draghi stated that the Central Bank would consider any necessary measures measures to help the single currency economy to recover from its current fragile economic position. This could mean we see interest rates cut to zero or close to zero percent or perhaps more money pumped into the European banking system both of which could again signal more EUR weakness, however I would not be surprised if the ECB gave their latest interest rate cut time to take effect before they take further action.
Following this major news yesterday it was confirmed that credit ratings agency Standard and Poors had cut France’s credit rating to AA from AA+. This downgrade was largely attributed to the high level of unemployment in the country. This news highlights just how precarious a position some of the larger European nations are currently in and therefore this is likely to have a further knock on effect for the Euro. If France, one of the largest and most powerful economies in the Eurozone was to face hightened economic problems then it will bring back into focus the economic stability of all Eurozone nations especially the likes of Greece which could re-highlight the major uncertainty we saw over the last year to 18 months which again could bring the Euro into focus and as a result may send rates higher.
If you need to buy Euros we are currently close to the highest levels we have seen this year so it may be prudent speaking with one of our experienced currency brokers. Also, later today we have US non-farm payroll data which could be a big market mover for USD so to keep informed of all the latest currency news speak to us today on 0800 328 5884 or alternatively email me directly on firstname.lastname@example.org