With Mark Carney’s comments last week that there will not be an interest rate hike any time soon in the UK, you would have thought that the Pound would be struggling against the Euro this week. However, with Greece seemingly back in the headlines yesterday, and with the US Federal Reserve looking more and more likely to raise interest rates in December, we are still seeing fantastic opportunities for exchanging Pounds to Euro.
As part of their third bailout package, Greece were meant to receive a €2bn payment yesterday, however it was announced that they would not receive these funds yet as there are still ‘milestones’ to be hit. Eurogroup President Jeroen Dijsselbloem stated yesterday afternoon “The 2 billion will only be paid out once the institutions give the green light and say that all agreed actions have been carried out and have been implemented. That still has not happened.”
This to me goes to highlight just how delicate the situation in Greece is. This, coupled with the likelihood of a rate hike in the US happening sooner rather than later has led investors to move their money out of the Euro and into safer havens such as the Dollar – hence yesterday’s Euro weakness.
Tomorrow afternoon ECB President Mario Draghi will hold a speech at 13:15 and his comments have the potential to create further volatility on the market. There have been rumours that the ECB could cut their deposit rate (the rate it charges banks to hold large deposits) even further in the near future and this could have the potential to weaken the Euro further still.
I hope you found my Euro currency report informative, if you have any questions about EUR rates and what could affect them in the short term, I would be happy to discuss them with you. You can reach me at firstname.lastname@example.org.
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