The Euro weakened towards the end of last week against the Pound, after signs of an agreement between the UK and EU looked as though it could be edging closer. However reports over the weekend of Michel Barnier being ‘strongly opposed’ by Theresa May’s latest trade plans have caused the Pound to weaken again and the Euro has started the trading week in the low 1.11s. More on this below, with the table showing the range of GBPEUR exchange rates throughout the past month, demonstrating the difference in return you could have achieved in Euros when selling £200,000.00 at the high and low points.
|Currency Pair||% Change||Difference on £200,000|
Italy has once again come into the spotlight after a report from an Italian cabinet official on Friday warned of the possibility of Italy breaking the EU’s rules of financial stability, stating that a need to invest in infrastructure including roads, bridges and schools could push Italy into a debt deficit of over 3%, which is the maximum the EU will allow.
The collapsing viaduct in Italy last month has mounted pressure on its Government to ensure that its ageing infrastructure is reviewed as a matter of urgency. Cabinet Undersecretary Giancarlo Giorgetti stated that if exceeding the 3% limit was necessary to ensure the safety of the country, then they would do it. However as one of the Eurozone’s worst performers economically (Italy’s debt amounts to 130% of its GDP), this could have large implications on the value of the Euro going forward.
The UK Parliament return to work after its Summer Recess tomorrow, which will likely prompt more uncertainty as Brexit discussions continue, so I would expect further volatility this week for GBP/EUR exchange rates.
The Eurozone and the US are also currently in negotiations regarding trade tariffs – something which could also heavily dictate Euro exchange rates this week. Donald Trump had asked the EU to drop all tariffs, and the response from the EU was to offer the US a free trade deal, which Trump hasn’t yet accepted.
Data releases for the Eurozone this week include manufacturing PMI this morning at 09:00 which is expected to improve slightly, and Services PMI is released on Wednesday. Retail Sales figures also released on Wednesday are expected to show a fall from 0.3% to 0% in July compared to June, which could cause Euro weakness. For any clients with an upcoming Euro currency requirement, get in touch with us today so that we can help you to time your transfer around these events.
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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