The US President and the European Commission President met in Washington to talk about trade yesterday. The Euro repport below covers the topics discussed and the potential impact on the single currency. The table below shows the range of Euro exchange rates for the past month, showing the difference in return you could have achieved when selling £200,000.00 to buy Euros.
|Currency Pair||% Change||Difference on £200,000|
Trump announced a “new phase” in US-EU relations with the goal of working towards ‘zero tariffs’. The US President claims he secured concessions from Europe including lower industrial tariffs and for the bloc to import more American soybeans.
Most importantly for Euro holders, the outlook of talks seems to be positive, with Juncker saying tariffs will be held off and existing tariffs on steel and aluminium will be reassessed. The Euro has strengthened off the back of yesterday’s press conference, this will be welcomed by Euro sellers and may be worth taking advantage of if you have an immediate transfer.
This is because with Trump, there is often another tale to the story. To think that there will be no bumps in the “new phase” of US-EU relations could be naïve.
If Trump's recent visits to the UK and Russia have taught us anything, it’s that the probability of him coming out with conflicting statements is very high. To that extent, I would not be surprised if we saw another tweet or press release which would imply negotiations were not as positive as originally stated. If this does happen, it is probable that investors will move to the safe-haven Dollar and away from the single currency, resulting in USD strength and EUR weakness.
Yesterday’s positive German IFO survey and ECB inflation data resulted in minor Euro gains against the Pound. These are positive signs and contribute towards higher inflation which increases the possibility of interest rates hikes further down the line.
Today’s ECB interest rate decision (11:45) is expected to remain stable however Mario Draghi’s tone during his press conference (12:30) will be closely watched by markets. The EU is said to be cutting and potentially stopping its quantitative easing program by the end of the year. This could lead to a slowdown in European economies and thus, Euro weakness vs the Pound. If Draghi provides new positive insight and a positive tone, we could see the single currency strengthen and end the week on a high.
If the program is maintained and tone is dovish, it means a future interest rate hike could be delayed which might result in Euro weakness against Sterling and the USD - the Bank of England and Federal Reserve are expected to raise interest rates this year.
It has now been a week since GBPEUR has been fluctuating in the 1.11-1.13 range after staying in the 1.13-1.15 – barring two spikes - range since mid-March. If recent events have taught us anything, it’s that it will take an accumulation of several events for or against the Pound of the Euro for GBPEUR rates to go into a different range. Though I do not envisage this happening in the short term, it remains a possibility.
The Euro could swing either way today, and it may be worth you letting us know your position. Our expert team can call you as soon as rates move in your favour.
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.
The best in the business. I use FCD frequently and have absolutely no hesitation in recommending them to others. Pricing is immensely keen and front and back offices are highly efficient. Great all round service.
Good prices, efficient and friendly service – what more could one ask for.
Quick and efficient way of moving our money. Don’t have to worry about the money not being in our bank the following day. Having been using you for 10 years now.
I have absolutely no complaints about the services I have received from you. Every time I have used your services I have received complete satisfaction in every way. Excellent all the time.