The President of the European Central Bank (ECB), Mario Draghi delivered a speech yesterday and focussed on the interest rate forecast for the next 12 months, in addition to his expectation for base-line inflation. The Euro report below discusses Draghi's outlook for monetary policy moving forward and the potential impact of his comments; the table displays the range of Euro exchange rates for the past month and the difference in Euro return depending on the timing of the transfer.
|Currency Pair||% Change||Difference on £200,000|
Draghi’s comments suggested interest rates could be kept on hold at 0% until as early as summer 2019, which could then see no further change until his tenure ends in October next year, which has typically been expected by economists and forecasts.
Despite this, Draghi anticipates a steady increase to underlying inflation and projected movement closer to the 2.0% target set by the Central Bank.
His comments saw EUR gains against USD of almost 0.8% during yesterday’s trading, but similar gains were not experienced against Sterling. However, GBP/EUR levels are still currently fluctuating at the better levels seen in the last 12 months for EUR sellers.
The ECB president is due to speak again on Thursday, along with a handful of his colleagues throughout the week, which could see favourable EUR movement.
According to new reports in Germany, there are growing concerns surrounding the post-Brexit transition for the German manufacturing sector, despite the comments over the weekend from Angela Merkel that the UK separation from the single market would have a ‘relatively small’ impact on the German labour market.
German manufacturers are understood to be becoming increasingly concerned about Brexit, not least because it is coming at a time of worsening conflicts and barriers in global trade, headlined by US President Donald Trump's bullish approach to negotiation with China.
There have been widespread signs of a slowdown in manufacturing for the Eurozone’s largest economy, shown in recent economic data and with the fresh concerns coming from the UK Government yesterday surrounding the challenges facing transportation across borders, there is cause for concern that if clarity surrounding a potential trade deal does not come soon, multiple parties are likely to suffer as a consequence and pressures on GBP/EUR rates will continue.
There is a variety of economic data released this week across the Eurozone, but investor attention will be focused towards the end of the week as employment and inflation data is set to be released for Germany, and inflation data in the form of the consumer price index for the Eurozone as a whole.
Positive changes from the previous could see favourable euro movement, so clients buying euros could benefit by considering their positions sooner rather than later.
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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