This Euro report will address the factors that are likely to affect exchange rates in the short term if you are buying abroad or making a currency transfer. The below table displays the difference in Euros you would have achieved when buying £200,000 on Friday.

Currency Pair% ChangeDifference on £200,000
GBP/EUR0.4819%€1100

If growth continues, could we see a drop in stimulus?

euro coins with notesEconomic growth in the Eurozone has been significant, growth has been twice as a big as the US in the first quarter of 2017.

Investors and analysts alike are still wary however. The Euro has been a difficult currency to have faith in historically. It raises the question, is this surge in growth set to be sustained?

If the European Central Bank (ECB) are convinced growth could continue, the decision could be made to cut current Quantitative Easing (QE). QE is essentially pumping money into an economy in order to stimulate growth. Current stimulus is set at €80bn month. The ECB have yet to show the confidence to make a cut, but if this growth continues a cut could be on the cards. This could cause substantial strengthening for the Euro.

There are suggestions that growth could be sustained. Peter Praet, a member of the ECB’s executive board has stated “ The dispersion of growth rates across both countries and sectors is at its lowest levels in two decades, reflecting a convergence of growth rates around higher levels.”

This was also backed up by Erik Nielsen, global chief economist of UniCredit, who has said “The first leg of the eurozone recovery was driven by exports and now it’s spreading to consumption and also in some places, to investment.”

If indeed growth proves to be sustainable we can expect 1.20 to remain a resistance point for the foreseeable future.

Manufacturing and Services PMI could create movement on GBP/EUR

Manufacturing and Services Purchase Managers Index (PMI) are released on Friday. Services PMI displays the condition of sales and employment within the services sector and can influence Euro value. Manufacturing PMI has more clout however and has a larger impact on GDP and we will see the data coming in just after the services figures. It will be interesting to see if growth continues.

For more information on how future data releases could affect your Euro requirement, call our trading floor on 01494 725 353 or email me here.