The European Central Bank (ECB) released their latest interest rate decision yesterday, leaving interest rates on hold, and noting risks for the euro economy remain ‘tilted to the downside’. In what could be a sign of further woes ahead for the single currency, which has had a shaky start to 2019, the ECB kept to its previous narrative of lower interest rates for longer and extended loans to European banks.

Currency Pair% Change (Month)Difference on £200,000
GBPEUR2.48%€5,872

Earlier this week the International Monetary Fund (IMF) had downgraded Eurozone growth from 1.6% to 1.3% for the year ahead. Germany in particular, the powerhouse of the Eurozone economy has been a major cause for concern, with Donald Trump threatening tariffs on European cars. The Trump administration has also outlined $11bn worth of tariffs on other goods, including EU cheese and wine.

ECB interest rate decision to take centre stage

Politics is also a key topic for the euro, with a variety of different approaches being sought by European leaders. Lack of unity over how to treat the UK on Brexit embodies the political difficulties faced by the Eurozone. Some countries are seeking closer integration and cohesion, whilst others are seeking less control from Brussels and more independence.

The ‘Far-right pact’ could prove a major thorn in the side of the Euro as we enter the European elections in May, where more extreme leaders from other EU member states are seeking to link up and threaten the stability which has kept the euro relatively calm in recent years. Any clients with euros to buy or sell may wish to highlight their situation to their account manager to monitor the latest news and provide updates.

GBP/EUR forecast

Between the high and the low in 2019, GBP/EUR interbank exchange rates have moved close to 8 cents, with us being just 2 cents from the 2-year highs at present. It is easy to forget many clients experienced rates of less than 1.10 in the last couple of years, and hanging on hoping for big improvements could ultimately prove disappointing. The extension is for now just extending the uncertainty and GBP/EUR rates are likely to remain at the mercy of Brexit developments, which will remain very difficult to predict.

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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.