The single currency has found itself under pressure this week, with dovish comments from the ECB earlier this week and Donald Trump’s ongoing trade war with China weighing on the Euro’s value. The Euro report below shows the difference in Euros you could have achieved when selling £200,000.00 during the past 30 days, based on the range of exchange rates available during this time.
|Currency Pair||% Change||Difference on £200,000|
Earlier this week, as had been expected, ECB head Mario Draghi announced that bond buying would be wound down completely by the end of this year. What gave the Euro a wobble however, was the admittance that interest rates were likely to remain on hold ‘through next summer’.
It had previously been expected that the ECB could raise rates at the beginning of next summer, so I would expect that if they continue to push back the chance of a rate hike then we could see the single currency under increased pressure over the coming months and at future press conferences from Draghi. I personally believe that as the interest rate gap between the Eurozone and the US widens, the Euro will struggle to make any significant gains.
Another factor that is having a detrimental impact on the Euro is the ongoing trade feud between the US and China, with fears that Trump’s protectionist policies could have a negative impact on the Eurozone economy. Eurozone economic growth forecasts have already been slashed for the next three years and this is without factoring the impact that a trade war could have on the global economy.
Earlier this month the US imposed taxes on European imports of steel and aluminium and it is expected on Friday that the EU will launch retaliatory tariffs against US exports such as motorbikes and clothing. This topic could have serious implications for both the global economy and many of the major currencies, so it is worth keeping an eye on developments, regardless of which currency you are buying or selling. The remainder of this week is fairly light on data for the Eurozone, but of note will be tomorrow’s manufacturing and services PMI data which are a strong indicator for how these two sectors are performing.
The initial expectations are that the figures for June could be set to fall compared with May, which could lead to some Euro weakness.
There is a Euro group meeting today which could also create some headlines, with Greece set to be one of the main topics discussed and how they can return the nation to some stability after they exit their bailout in August. Any clients with a Euro exposure should keep an eye on events from this meeting as they unfold as information leaked could have an impact on the value of the single currency.
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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