With the markets focus seemingly directed on the UK economy at present due to the UK Government’s current struggles to negotiate a satisfactory Brexit deal, it seems as though the pressure that was building on the Euro has lifted slightly. The Euro report below looks into how a recent uplift in economic data has improved the Euro against the Pound and limited damage against the Dollar. The table below displays the difference in return you could have achieved during the high and low trading points of the past month, depending on the timing of your transfer.
|Currency Pair||% Change||Difference on £200,000|
The single currency has certainly found some support against the Pound of late, whilst also curbing any further losses against the USD. GBP/EUR rates are currently trading around 1.12, whilst EUR/USD have recovered back above 1.17 at yesterday’s high.
This upturn could be linked to a spike in Business Confidence figures for June, which unexpectedly came out above market prediction. The anticipation had been for these to fall again, with recent data indicating that the Eurozone’s economic productivity was falling.
Whilst the Eurozone economy has undoubtedly slowed during the first half of 2018, the European Central Bank (ECB) have remained upbeat in their outlook and are convinced that the economy will withstand any withdrawal of their current monetary policy programme.
This in itself has been a key issue for investors looking to buy or sell the Euro. ECB President Mario Draghi initially indicated that the current Quantitative Easing (QE) programme would be tied up by September, before confirming it would be pushed back to the end of this year. Whilst he claims this is still the ECB’s aim, he is yet to commit to this fully. Any extension to this timeline could be viewed as a negative for the Eurozone economy, as investors could well assume it is not strong enough to support itself, without this continued monetary injection.
Another potential negative and possibly the most concerning of any underlying issue, is the current trade standoff between the EUR & US. Trumps trade tariffs could hit the Eurozone economy hard, due to a slowdown in demand for its exports.
Looking longer-term this scenario could destabilise economic growth inside the Eurozone, which in turn could heap pressure back on the Euro.
These underlying risks indicate that clients looking to sell EUR could well look at the current levels as being very favourable in months to come. This would almost certainly be the case should the relationship between the EU & US deteriorate any further, and as such, clients may wish to take advantage of the current spike and some of the best levels seen against the Pound since November 2017.
Short-term, any clients with a EUR currency exchange to execute should be monitoring today’s inflation data released at 9am, along with Thursday’s ECB interest rate decision and Mario Draghi’s subsequent monetary policy statement.
Both of these releases have the ability to impact the EUR value significantly, depending on what stance the ECB take.
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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