The Bank of England's decision on Thursday could weaken Sterling creating opportunities for Euro sellers.
The Euro is showing signs of positivity of late, with better than anticipated Manufacturing data beginning the week, followed by yesterday’s Producer Price Index for June showing a reading of 52, better than expected and that of last month and year. PPI measures the change in prices received by domestic producers for their materials and goods, but the minor Euro strength which followed the news was short lived after UK Construction data came out far better than expected.
We are just beginning to see the impact on data following from the Referendum, but these usually major data releases seem to be having very little impact on exchange rates at present. It would seem that all focus is currently being drawn to any major monetary policy changes rather than the finer details of data. This morning at 9am will show us the latest data from Markit Services PMI, and is expected to remain the same as the previous month.
I feel that the attention this week will be on the Bank of England on Thursday and whether or not they decide to cut Interest Rates following from the Brexit vote in June. Any change from the current low of 0.5% has the capacity to cause huge volatility for GBP/EUR exchange rates, as demonstrated in 2009 when rates were last cut, and a near 7 cent crash was witnessed. Any clients holding Euros to purchase Sterling in the near future would no doubt benefit from keeping in close contact with their broker here to discuss their options ahead of this announcement. In my opinion, if rates are cut we could be presented with some of the best opportunities to buy Euros in 5 years if the 2009 rate cut fall of 6% repeats itself.
If you have Euros to sell for Sterling, this Thursday could create further opportunities with the interest rate decision from the BoE, call us on 01494 725 353 to discuss further.
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