This Euro report will address the factors that are likely to affect exchange rates in the short term if you are buying abroad or making a currency transfer. The table below shows the difference you would have received when buying £200,000 at the high and low points of the last month.
|Currency Pair||% Change||Difference on £200,000|
As regular readers will know, the EUR has performed beyond expectation over recent times, with significant gains against the other major currencies.
Whilst it has made strides against Sterling and the USD due to a run of improved economic data and a positive outlook by European Central Bank (ECB) president Mario Draghi, it has also benefited from a downturn in both the UK economy and a lack of confidence in US President Donald Trump and his policies.
EUR sellers have seen a move below 1.12 against Sterling at its recent high, whilst it has gained over five cents against the greenback over the past few months.
With pressure remaining on the UK economy due to a fragmented government and on-going Brexit fears, many clients holding the EUR may be holding out for further gains.
Therefore, yesterday’s poor Manufacturing & Services data becomes even more significant, along with a survey that indicated economic activity across the 19-country Eurozone had cooled slightly.
Whilst record highs remain there is no undue cause for panic, it is a reminder that the markets do not move in one direction indefinitely and it may be wise to consider any short-term EUR sell positions.
One of the key points for EUR sellers to consider is that whilst Brexit is currently driving Sterling’s value down, the ripple effects for the Eurozone have not, in my opinion, been fully considered or factored in to the current Euro value by investors.
How will the EU fair following the UK’s departure? Will any trade deals cause a slowdown in demand for Eurozone goods & services? Will the UK’s exit ultimately cause other member states to question their future in the single block?
Add to this a possible destabilisation of the German economy following what could well turn out to be a very tightly run election in September and there are certainly reasons for EUR sellers to be cautious.
It may be prudent to take advantage of the current highs, remove any risk from the market and sit back safe in the knowledge then any downturn over the coming months will be avoided.
Thank you for reading my Euro currency report, if you have any questions about Euro exchange rates I would be more than happy to discuss them – you can contact me with any queries here.
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