Comments from Mario Draghi after the ECB's latest monetary policy meeting would generally have strengthened the Euro, however focus appears to have moved to the UK's current position and updates on Brexit negotations. This Euro report discusses the factors affecting the Euro in the upcoming months. The table below shows the difference in Euros you could have achieved when buying £200,000.00 during the high and low points of the past month.
|Currency Pair||% Change||Difference on £200,000|
All eyes were on the start of the EU summit, which began in earnest yesterday. Although the opening day had little impact on the currency markets, the EUR itself has come under some pressure this week.
It is likely today will bring more clout with Brexit talks taking centre stage, so expect further volatility for the single currency as we head towards the close of this week’s trading.
It’s been a strange few days for the EUR, which up until this week had been performing admirably against the Pound. As discussed earlier in this report, an agreement between the UK & EU over details of the Brexit transitional period is now in place and has certainly driven investor confidence in Sterling. This in turn has pushed the EUR value down, although the single currency did find plenty of support around 1.15.
The Eurozone economy has shown signs of strength for some time and this feeling was solidified following comments made by European central Bank (ECB) and its President Mario Draghi, during their latest monetary policy meeting. He stated that they hoped to tie up their current Quantitative Easing (QE) programme by the end of this year, a decision which indicated that the Eurozone economy no longer required “propping up” and was strong enough to survive without any external monetary injections.
This was seen as a key statement and could have helped propel the EUR value higher but since that statement it seems as though the markets are starting to focus on the UK’s economic position post Brexit and as such, the deal now in place between the UK & EUR has helped to drive investor confidence higher.
There is also growing concerns that President Donald Trump’s proposed tariffs on imported aluminium & steel products could have a serious impact on Eurozone exports, which in turn is likely to be a negative for investors looking to invest their funds in the Euro.
In the short-term, yesterday’s Eurozone Manufacturing & Services data came out under last month’s figures and below the predicted result, news which again caused investors to shy away from the EUR, weakening it as a result.
However, despite this relative downturn I still feel the EUR will find a level of support over the coming days, as we witnessed during yesterday afternoon’s trading. In my opinion it is highly unlikely that the single currency will go full circle in such a short space of time. With details of the Brexit transitional deal still to be finalised and the US Fed talking down multiple interest rate hikes this year, those clients with any EUR currency exchanges to execute may well see their positions stabilise over the coming days.
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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