This Euro report will examine the factors that could affect exchange rates this week in order to help you stay informed if you need to make a currency transfer. The table below shows the difference you would have received in Euros when buying £200,000 at the high compared to the low on Friday of last week.

Currency Pair% ChangeDifference on £200,000
GBP/EUR1.3438%€3020
QE tapering now a possibility by the end of the year

QE tapering possible by the end of 2017

Last week saw Mario Draghi, the head of the European Central Bank address the situation on tapering Quantitative Easing, something investors have been keenly anticipating.

GDP figures had come in before Draghi’s speech and there had been a significant increase. There has been growth for the majority of the year despite a small blip in services data last week. Eurozone growth is now forecast to rise by 2.2%.

Quantitative Easing (QE) is pumping money into an economy in order to stimulate growth. Monthly increments are currently set at €60bn.

Draghi indicated there is the possibility of tapering QE as early as October. If this did occur by the same level of previous tapering I would expect the euro to strengthen significantly. I am not of the same views as some of the economists predicting parity, but I think below 1.05 on GBP/EUR is a distinct possibility should tapering occur.

There may however be some reluctance from the ECB following comments from ECB member Philip Lane, who stated there would be an accommodative stance until we see convincing evidence inflation on sustainable path to target. Which did cause a Sterling spike for GBP/EUR, now at a three week high in the high 1.09s.

I think this rally maybe short lived. If data continues to impress from the Eurozone, tapering will be highly likely. I would be trading at current levels.

Friday's Trade Balance figures could influence GBP/EUR

Trade balance data is released on Friday and it will be interesting to see if exports have been hit due to the weakness of the pound and UK importer’s reluctance to purchase large quantities of stock due to this.

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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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.