The Eurozone has struggled with inflation and consistent growth for a long time and has stated that in order for monetary policy to change we would need to see consistent improvement in these areas. More information on whether the ECB will be in a position to reduce current QE measures before their goal of the end of this year below, with the range of exchange rates for GBPEUR outlined in the table that follows, showing the potential difference in return you could have achieved during the high and low trading points on Monday of this week.
|Currency Pair||% Change||Difference on £200,000|
The Eurozone is currently involved in a Quantitative Easing (QE) program. Quantitative easing (QE) is an unconventional monetary policy in which a Central Bank purchases and Government securities or other securities from the market in order to boost economic activity. Quantitative easing increases money supply by flooding financial institutions with capital in an effort to promote increased lending and liquidity. Quantitative easing is considered when short-term interest rates are at or approaching zero. It has been announced that the European Central Bank (ECB) would be looking to cease the current QE program by the end of the year. Current data however has been poor, with weak growth figures and an insufficient rise in inflation. If it is the case that QE could be extended we could see Euro weakness. Please note this is a long shot however, if you are sitting on Sterling I would look to take advantage of current levels as I think that current levels may not be around for much longer.
Euro sellers however, be mindful. You have to take into account risk verses reward and the risk of QE being extended is significant to the value of the Euro. Hanging on for small gains could prove costly considering the current advantageous situation Brexit has created.
I would be very surprised to see any change in Interest rate levels during this week’s meeting. There has been a lack of positive data that would not warrant upping interest rates and this has been the case for some time.
Following the interest rate decision there will be a press conference and investors will wait with baited breath to see if there is any news on QE following the meeting, so keep a close eye on events as they unfold as this has the potential to create volatility.
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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