This Euro rate forecast looks at why the Euro has weakened recently. We also discuss the events that could affect EUR exchange rates for the rest of this week. In the table below you’ll see high to low GBPEUR exchange rate movement and the diference when exchanging £200,000 to Euros during the last month.
|Currency Pair||% Change||Difference on £200,000|
The German economy has continued to perform well recently. Since 2008 the German housing market has exploded with the average house price climbing by over 50%. In the UK, where many think the housing market has been a traditional safe investment houses have only risen by 16% over that same period. Due to the appreciation in the value of the Euro if a UK investor bought in Germany ten years ago the gain would have been nearly 80%.
The most recent German IFO survey, which is a form of business sentiment and confidence, however has fallen for a third consecutive month. The European Central Bank (ECB) recently suggested that the QE program could well continue for longer than previously thought. Mario Draghi, the head of the ECB seems to have hinted that the region’s recovery has "lost momentum." This news shocked the market and resulted in the Euro falling to a three-month low against the US Dollar. Against the Pound, with UK economic concerns and Brexit uncertainty continuing, it had a much muted impact. I would expect the GBPEUR pairing to remain volatile as the central bank policies remain so changeable on both sides of the channel and for any hint to change the markets quickly.
Any hint on change to the ECB’s banking policy will come next Thursday with the Economic Bulletin. This is something to watch out for if you have any exposure to the EURO. This however is the same day as the latest Bank of England update which I expect to take centre focus for GBPEUR.
Recently we had the latest GDP figures for the Eurozone. Growth across the whole block is expected to be close to 2.5% this year and is generally growing at a slower pace than many had expected earlier in the year. Against the Pound however it is faring better with the UK growing by only 0.1% compared to the Eurozone’s 0.4% in the first quarter of 2018. Interestingly the Eurozone has grown at a faster pace in 5 of the 7 quarters following the EU referendum.
European Consumer Price Index is released this morning and has been an area of the economy under pressure. Disposable spending across Europe as a whole has been falling and this has resulted in a contraction in consumer spending and retail figures. Tomorrow there is Retail figures and Services PMI data to end the week. Following Mario Draghi's commentary recently suggesting a slower performance in the region we may well see a drop here and therefore help EURO buyers get a better price before the long May Bank holiday in the UK.
For more information on how future events could affect Euro exchange rates, call our trading floor on 01494 725 353 or email me directly at firstname.lastname@example.org.
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