This Euro report will examine the factors that could affect exchange rates in the coming months to help you stay informed if you need to make a currency transfer. The table below shows the difference you would have received when buying £200,000 at the high compared to the low on Friday.
|Currency Pair||% Change||Difference on £200,000|
European Central Bank (ECB) President, Mario Draghi spoke last week at the most recent ECB press conference. There have been concerns that the Euro is too strong with the Euro currently sitting at the best levels since 2014 against the Dollar. With Euro value so high it could hinder exports which in turn will be detrimental to the economy. Draghi stated this was not a cause for worry.
He had a similar attitude to inflation which has been a problem for the Eurozone. He said that consistent positive data shows healthy growth within the bloc and that inflation would move toward the target of 2% without a change in monetary policy.
I think the fact that Mario Draghi indicated that Quantitative Easing could continue beyond the target could have been a factor in the Euro not making further gains following the speech.
He did mention Quantitative Easing (QE) briefly. QE is pumping funds into an economy in order to stimulate growth. Monthly increments were reduced from €60bn to €30bn last year and Draghi said that the cash injections could continue past the ECB’s current target which to me shows a lack of confidence in sustained growth in the bloc.
There are reasons for a potential fall in Euro value however. Italian elections are to commence in March and there are far right parties that are gaining in popularity. Casa Pound for example, if such a party were to gain power their strong stance on immigration could lead to a referendum which could cause substantial Euro weakness. The Catalonian independence situation should not be ignored as this also has the potential to cause Euro weakness. If independence from Spain becomes more likely expect Euro weakness.
Eurozone GDP data is due out tomorrow and if we see a rise above expectations it could lead to further speculation of a possible rate hike by the ECB or a cut in Quantitative Easing (QE).
Consumer Price Index (CPI) is released on Wednesday. It is a measure in inflation, something the Eurozone has struggled with in the past. Again, if we see a rise this could influence future monetary policy and in turn influence Euro value.
Thank you for reading my Euro currency report, if you have any questions about Euro exchange rates I would be more than happy to discuss them – you can contact me with any queries on 01494 725 353 or email me here.
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