It was a fairly tough start to the week for Euro exchange rates as German Factory orders plummeted to their lowest levels since January 2017. Data releases from Germany are key for the Eurozone so negative data can impact the Euro significantly. The table below shows the difference in Euros you could have achieved in return when selling £200,000.00 during the past 30 days, depending on the exchange rate available at the time of trading.
|Currency Pair||% Change||Difference on £200,000|
As Germany is the powerhouse of Europe, German data releases tend to have more of an impact than other countries within the bloc. The yearly figures dropped to -0.8% from 4.4% and monthly figures dropped to -4.0 from last month’s 2.6%. However GBPEUR exchange rates actually continued to decline yesterday as Trade Secretary Mr Fox announced he believed there was a 60% chance that the UK would fail to agree a deal with the EU and shortly after found himself defending the potential Trans-Pacific partnership.
Looking ahead to the upcoming weeks, I still expect the GBPEUR exchange rates to be heavily influenced by Brexit developments. With UK MPs on their summer holidays at present I am not surprised that Brexit related stories have eased compared to previous months.
However towards the back end of August I expect the negotiations to be in full swing. Unfortunately it’s very difficult to predict the outcome of the Brexit negotiations however both parties have announced that October is the deadline, therefore major volatility should be expected in the upcoming months.
Even though the Euro remains strong against the pound, it’s not all positive news for clients that are exposed to euros. The Euro was the second worse performing currency last week out of the major currencies and was followed closely by the Pound. Since the start of the summer EURUSD exchange rates have plummeted 8 cents from 1.2350 to 1.1550. The concern for investors is that the ECBs reduction in QE could slow the European economy further and the Central Banks stance in regards to interest rates is extremely negative compared to other central banks around the globe. Furthermore debt levels in Europe remain high for many of the key nations. For example Greek debt is 180% of their GDP and Italian debt is 132%. If any of the debt stories resurface and the reduction in QE does not benefit the European economy it could be a tough end to the year for Euro sellers.
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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