The Euro could be set for a volatile period ahead with a number of important factors helping to drive Euro exchange rates. The Euro report below looks into the factors currently impacting the single currency in the coming weeks, the table below shows the difference in return you could have achieved in Euros when selling £200,000.00 during trading hours yesterday.

Currency Pair% ChangeDifference on £200,000
GBPEUR1.2%€1360

On the one hand the trade disputes between the US and EU have settled for the time being in this “new phase” in US-EU relations which should prove positive for the Euro as long as things do not deteriorate further. Trump's attacks on German cars have also not been mentioned of late. The recent political risks to the Euro stemming from elections in Germany and Italy have also passed which leaves room for improvement for the single currency.

On the other hand, ECB President Mario Draghi has indicated that the first interest rate increase could arrive in September 2019 which has actually put pressure on the Euro considering it is over a year away. This is certainly helping to see a shift in EUR USD exchange rates causing the single currency to fall due to what will become a greater divergence in interest rates between the US and EU – The US FED should be on course for another two rate hikes this year alone.

The same is true for the UK in that the Bank of England unanimously voted to raise interest rates by 0.25% last week whilst signalling further rate rises. The Euro would most likely be weaker against the Pound if it weren’t for the ongoing Brexit uncertainty which is resulting in the GBP EUR pair falling.

EU Weaker Data Causes Concern for the Euro

EU Weaker Data Causes Concern for the Euro

The Eurozone was dealt a blow earlier in the week on the back of very poor German factory orders which fell by a staggering 4% in June representing the biggest fall in 18 months. So far, the markets have proved resilient and are brushing the data off as a one off considering the overall strength of the German economy which has high business confidence and low unemployment. With no major economic releases from the EU to end the week focus moves to next week’s Gross Domestic Product (GDP) numbers on Tuesday and inflation data next Friday. EU GDP across the bloc has been softer throughout 2018 giving some cause for concern for the Euro so next week’s data could be the test for the EU.

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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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.