This update examines factors that could affect your Euro exchange in the short term. The below table displays the difference in CURRENCY you would have achieved when buying £200,000 over the last 30 days.
|Currency Pair||% Change||Difference on £200,000|
Over the last four weeks GBPEUR has fallen 5 cents to an 8 week low. To put this into monetary value a €200,000 purchase is now £7,500 more expensive. In my opinion there are four main reasons why GBPEUR has plummeted.
Firstly, the UK general election is putting pressure on the pound especially that the labour party are gaining momentum and closing the gap on the Conservatives.
Secondly, economic data from the UK has disappointed. Revised GDP numbers have fallen to 2% from 2.1% and the Bank of England released a dovish statement suggesting inflation is outpacing wage growth.
Thirdly, President Donald Trump’s firing of the FBI director has created political uncertainty for the US and we have seen a sell of US dollars to buy Euros which in turn has strengthened the euro and therefore had a negative impact on GBPEUR exchange rates.
Lastly, Mario Draghi confirmed unemployment levels have fallen to the lowest levels seen since the crisis began and growth within the Eurozone is continue to improve.
With a five cent fall in four weeks I would be surprised to see the rates fall much further in the run up to the election. When the result is announced quite simply a conservative victory I believe will help the pounds position where as if the conservatives have to form a coalition I would expect to see further falls.
Thereafter Brexit negotiations will be in the spotlight and the ‘divorce settlement’ will be the main talking point. For clients buying a foreign currency within the upcoming years, at any point I believe Brexit negotiations could fail and therefore the pounds value potentially would drop like a stone. Therefore if you are not prepared to take risks purchasing upfront may be the best option for you.
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.
The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.
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