This Euro currency report looks at the factors that are likely to affect Euro exchange rates this week if you are buying abroad or making a currency transfer. Below are movements in just a month affecting GBP/EUR rates and the resulting difference when buying £200,000:
|Currency Pair||% Change||Difference on £200,000|
Yesterday’s terror attack in Notre-Dame sent another chilling message to the markets, as yet another attack on Western society was unveiled. Luckily there were no major casualties apart from the assailant but it will once again bring to the forefront the question of security and public safety.
Those selling Euros have seen their positions gain value this week and despite yesterday’s attack, managed to hold their position as the Pound’s struggles continued ahead of tomorrow’s key election vote.
With an increase in support for the Corbyn led Labour party, and concerns over Brexit negotiations, the EUR has been inadvertently boosted in value during the early part of the trading week.
Many EUR sellers will now be questioning when to sell their positions? Whilst we cannot predict the future, the question they need to ask themselves is whether they are willing to jeopardise the gains they’ve made over recent days?
To put it in monetary terms any client selling €100,000 EUR to buy Pounds will have gained an additional £2000 at the high compared to the same trade last week. I’m extremely risk averse when it comes to the currency markets and these gains should, in my opinion, be protected ahead of tomorrow’s election and the uncertainty of Friday’s result.
It was only a few weeks ago that EUR sellers were concerned that they may see GBP/EUR move above 1.20 and based on the markets factoring in a Conservative majority at that time, such a result could weaken the single currency instantaneously.
Whilst the markets remain cautious, this recent spike could present the perfect opportunity for those clients looking to sell short-term EUR positions. As I’ve mentioned I believe the main reasons for the improvement are based more around the reciprocal currency’s downturn, rather than an overriding investor confidence in the Euro.
EUR/USD rates have improved in line with the on-going controversy surrounding President Trump and these levels should be looked as extremely favourable, considering it wasn’t long ago the pair were trading below 1.09.
Looking at the Eurozone region and there are still many negative variables to consider, including political elections in Germany and the on-going debacle with Greece’s seemingly impossible repayment structure. I certainly do not have enough confidence that the single member states can move together in one entity, with further problems likely to occur over the coming weeks and months.
The European Central Bank (ECB) have already had to extend their monetary policy (QE) programme, which is where they inject additional funding to help support their economy and whilst ECB president Mario Draghi remains upbeat as usual, this in itself is a telling sign that all is not well inside the region.
Looking ahead and EUR sellers should be keeping a close eye on today’s Gross Domestic Product (GDP) figures. With an expected result of 0.5% growth, expect additional volatility on EUR exchange rates should the figures released come outside of this.
For more information on how future data releases could affect your Euro transfer call our trading floor on 01494 725 353 or email me here.
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