Currency Exchange Rates Ahead of Eurozone Inflation Data
The currency markets have remained very flat over the past few days with very little economic data having been released and this is the same again today, however, while the markets may be flat at present it could well be a different tomorrow with the eagerly anticipated Eurozone inflation data due to be announced at 9am. Inflation has been one of the key drivers for GBP EUR exchange rates in recent times and in fact is was due to the fact that inflation in the single currency economy was falling so fast that Mario Draghi and the rest of the European Central Bank (ECB) decided to cut interest rates which led to a lot of Euro weakeness and comments from the Central Bank that they would be prepared to act again should inflation show no signs of improving. This is why tomorrow’s announcement could be so crucial. Some analysts are predicting a drop in inflation from the current low figure of 0.4% to 0.1% which, if happens, would be very worrying for the Central Bank and is sure to prompt speculation that at next weeks interest rate decision there will be more action from the ECB. This could lead to a lot of Euro weakness and in fact if the data is worse than this expectation we could see rates pushing back up to the recent 2 year highs we witnessed on Sterling Euro. However, should we see inflation improve it could give the EUR some support, either way it will be vitally important to stay in close contact with your currency broker here at Foreign Currency Direct plc so they can keep you informed of all the latest news in the currency markets and discuss the options that are available to you. With the announcement due first thing tomorrow it may be worth speaking with us today.
US Dollar Outlook
In the meantime the main economic data of note is from the US where the latest Gross Domestic Product (GDP) figures are released which will go to show whether the US economy is still growing. There is expected to be a sharp increase in the growth figure and if this is the case and the other data due this afternoon (inlcuding unemployment figures, housing stats and personal consumption numbers) are positive we could see the Dollar gain against most the major currencies which could present clients with some excellent opportunities to sell Dollars. So, if you need to buy or sell USD then make sure you speak with us today.
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