The week ahead for the Euro begins with some key pieces of economic data to move Euro exchange rates. Following the ECB, European Central Bank’s recent meeting and confirmation of a path to raise interest rates by ‘summer’ 2019, markets will be closely checking Eurozone data to check it matches the path the ECB has laid forth. The table below displays the range of GBPEUR exchange rates during the past month, showing the difference in return you could have achieved when buying £200,000.00 during the past month.
|Currency Pair||% Change||Difference on £200,000|
Today’s Consumer Confidence data and Business Climate kick the week off at 10 am before German Inflation data at 13.00. Tomorrow is a busier day with Unemployment, Inflation and GDP, Gross Domestic Product data.
Expectations are for all the data to underscore the direction of the ECB which might see the Euro stronger for Monday and Tuesday. Unemployment might have risen slightly but if Inflation and GDP come in as expected, it is difficult to see weakness for the Euro.
The Euro has also found some support following Donald Trump and Michel Barnier’s meeting last week, which cooled investor nerves over the potentially damaging outcomes from the Trade Wars. By agreeing to remove and reduce tariffs on non-automotive industrial goods and increasing EU soybean purchases. This issue could weaken the Euro in the future but it has now helped the Euro rise.
Euro exchange rates will also face pressure this week from key interest rate decisions from both the US and the UK, which may push and pull the Euro in unexpected directions.
With both the US and UK having started their rate hike cycle ahead of the ECB, there is a prospect for the Euro to lose ground against both currencies this week. The US dollar seems most likely to benefit as strong GDP news last week makes a September increase from the Fed highly likely.
On GBPEUR the expectation is less clear, it seems only a rate rise and positive commentary will really see the pound rise higher against the Euro.
Whilst the expectation for a rate hike from the Bank of England is high, accompanying concerns over Brexit and meagre economic growth might see sterling lose ground.
GBPEUR exchange rates have experienced flat periods in recent weeks but this week has the ingredients to offer more volatility.
Clients with a Euro buying, or selling requirement may benefit from a quick review with their account manager today to help highlight all that lies ahead.
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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