The Euro was forced onto the backfoot once more during yesterday’s trading as frail services data as well as a drop off in new business orders sapped investor confidence in the single currency with growth prospects within the bloc potentially being revised for the foreseeable future. The Euro report below goes into further detail about how data releases are able to quickly impact exchange rates, with the below table displaying the difference in Euros you could have achieved when selling £200,000.00 during the high and low points of the past week.
|Currency Pair||% Change||Difference on £200,000|
Despite positive feedback from the latest Eurozone Manufacturing survey, the markets forced the single currency to surrender most of the gains from its impressive start to the week, leaving GBP EUR to hover in the mid 1.12s.
The fall in confidence from the services sector brought to light once more the cloud of uncertainty that has been hovering over the Eurozone as the threat of trade tariffs from the US looms nearer and nearer.
The timing of the fall in new factory orders could also hold particular relevance with the next European Central Bank interest rate decision just around the corner. A fall in new orders can often mean a contraction from the labour market as companies tread carefully instead of pushing for expansion, which in turn results in a fall in consumer spending. President Mario Draghi mentioned at the last meeting in June that one of the ECB’s main concerns is maintaining price stability and inflation levels across the block. Evidently investors took note of yesterday’s poor readings as an indicator that the ECB will be resigned to holding the current levels of monetary stimulus as planned in a bid to peg inflation levels higher, which will likely make the Euro less valuable on the international stage.
Both releases come as a hammer blow to Euro holders who seemed to be gaining real momentum in the second half of this month, having already gained nearly 1.5% against the Pound during the last 2 weeks.
My opinion is that as Brexit pulls away from the headlines over the summer period there is very little to suggest the Euro will be able to manufacture a move below 1.12 sustainably in the immediate future. Given we are currently in the best rate ranges to buy Pounds with Euros in over 15 weeks, if you are currently holding euros it may pay to consider your options before Thursday’s ECB meeting just in case Draghi’s comments chokes the Euro’s momentum further.
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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