Matthew Vassallo
Senior Executive Dealer
EUR Forecast – Mixed Fortunes for the Single Currency Ahead of Some Key Data Releases Today
The Euro has made gains against the Pound at the same time as losing ground against the Dollar following uncertainty about trade tariffs to be imposed by the US on EU imported products.
Request a quoteSince President Trump's decision to pull the US out of the Iranian Nuclear agreement, and news of potential trade tariffs to be levied on products imported from Eurozone suppliers the Euro has lost ground against the US Dollar. The Euro report below discusses how this could affect the Euro in the coming 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.
Euro’s value continues to fluctuate as Eurozone growth forecasts shrink
The Euro’s value has fluctuated over recent weeks, with various levels of success against the other major currencies.
Looking at two of the most traded currency pairs and the EUR has made some impressive gains against GBP but has seen its value decrease against the USD.
EUR/GBP rates have improved by over 2 cents since last Thursdays now infamous BoE rate decision. This is an additional £3000 on 200,000 EUR/GBP currency exchange.
EUR/USD rates on the other hand have fallen, with the pair now trading below 1.20. This could be in part due to the potential trade tariffs that US President Donald Trump intends to impose on any imported Eurozone goods, a move which could increase tensions between the regions.
Add to this, growing concerns over how Eurozone business may be negatively affected by Trump’s decision to pull the US out of the Iranian nuclear deal and it is easier to understand why investors may have shied from the single currency in recent weeks.
It is no secret that the Eurozone economy has certainly slowed of late, with the official figures for the first quarter of 2018 well below last years predicted growth. Many of the Eurozone’s key economies are under pressure, in particular Germany’s, which is widely considered the powerhouse of the Eurozone and has had the ability to withstand any economic downturn inside the Eurozone region.
ECB Remain upbeat despite slowdown
Despite this slowdown the European Central Bank (ECB) remains fairly upbeat in its stance. However, this year’s growth looks like it will fall well below 2017’s figures, which were impressive to say the least. ECB Mario Draghi has not always had the closest of relationships with the media and was grilled at his recent public address, where he failed to commit to any specific timeline, or changes to the current monetary policy scheme. It had been expected that this would be tied up by the end of 2018 but due to recent developments, this could well be pushed back.
Either way there are certainly triggers which could negatively impact the Euro’s value and as such I would be tempted to take advantage of the recent improvement against Sterling.
Key data releases today
Looking ahead and today could hold the key, for any clients with a EUR currency requirement this week. We have the latest Eurozone Industrial Production data, alongside the latest gross Domestic Product (GDP) figures.
GDP in particular will give the markets a key insight into the relative health of the Eurozone economy and with recent growth forecasts shrinking from their original estimates, the EUR could come under pressure should we see another negative reading.
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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