Despite negative economic data releases at the start of this week, the Euro has shown signs of resiliance, holding its own against major counterparts yesterday. The report below looks at the potential ramifications of uncertainty in the bloc. The table below shows the difference in Euros you could have achieved when buying £200,000.00 during the high and low points of the past 4 weeks.

Currency Pair% ChangeDifference on £200,000
GBP/EUR0.8%€2,000

How long can the euro hold its ground?

The euro has showed rare signs of robustness so far this week as despite a quick flurry of disappointing economic data released early during yesterday’s trading, the single currency was able to hold its ground against its major currency counterparts, still hovering in the low 1.14s against the pound.

Although this show of stability will be well received by euro holders, I’d be concerned that the underlying tendencies reflected in yesterday’s releases might begin to take hold of the Euro’s value as the week goes on.

Investor confidence fell to it’s lowest level since mid-2012 as a result of the shaky political scene in Italy, whilst inflation data once again came out short of the European Central Bank’s targeted levels. Both reflect the complex landscape the ECB is now faced with.

Where at the start of the year investors were holding out for a positive shift in monetary policy which was setting the scene for an ever-appreciating Euro, now the single currency seems riddled with question marks.

Italy’s credit rating could be downgraded this month

Warning signs for Euro sellers

This morning’s mixed Manufacturing and Services data from across the eurozone has once again been pinned to the uncertainty within the bloc with this likely to draw investor appetite away from the Euro making it cheaper to buy.

Mario Draghi is due to speak this afternoon and I expect him to highlight the importance of gauging the bloc’s economic performance aside from the short-term uncertainty in Italy.

Whether this sways the euro back in favour with the markets remains to be seen, particularly with Thursday morning’s key GDP release on the agenda.

If these readings follow suit with the latest trends we have been seeing then heavy euro losses should be expected. Those looking to sell euros might want to consider their position.

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

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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.