Euro sellers will be keeping a close eye on today’s European Central Bank (ECB) interest rate decision and subsequent monetary policy statement.
Whilst it is widely anticipated that interest rates will be kept on hold at 0%, the subsequent address by ECB President Mario Draghi is expected to provide the markets with key information, regarding the ECB’s future monetary policy ambitions. The table below shows the difference in Euros you could have received due to the change in exchange rates throughout the past month.
|Currency Pair||% Change||Difference on £200,000|
We may well be given an insight into the ECB’s current stance and thought process, regarding future monetary injections. We must remember that the central bank had previously indicated that they hoped to tie up all monetary policy assistance originally by September, before this was revised back to the end of 2018.
Whilst this timeline may still be their ultimate goal, any indication that they may extend it into 2019 could have a detrimental effect on the Euro’s value.
The markets may have to prepare themselves for a shift in policy, with the Eurozone economy widely accepted to have come off the boil over recent weeks.
There are growing concerns over a dip in economic productivity, in some of the key economies such as Germany & France. Political tensions in Italy & Spain are also weighing heavily on investors’ minds, which when combined, is hardly the ideal scenario for the ECB to make any bold decisions.
Whilst the central bank will look at the Eurozone economy as a whole the key contributors must surely be performing better than they currently are, in order to push the central bank towards tying up a monetary policy programme, which has supported the Eurozone economy so well in recent years.
The EUR itself is struggling to make any sustained impact towards the highs of last year against both GBP & the USD. It does however continue to trade at fairly attractive levels against both, especially when you consider the history on the pair.
Yesterday’s poor Industrial production figures may also cause a sell-off of the single currency by investors and in my opinion, there are too many negative variables to gamble on a significant spike in value for the EUR from its current levels.
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.