This week we have German Inflation Data, which if adheres to the expectation of 1.4% year on year, this could be further justification for the ECB to reconsider the current QE programme. The below table shows the difference in Euros you could have achieved when buying £200,000.00 during the high and low points of the past 30 days.

Currency Pair% ChangeDifference on £200,000
GBPEUR2.2%€5,050

Why is the Euro so strong at the moment?

The Euro has continued to remain strong against both Sterling and the US Dollar. Indeed, only at the middle of last week the Euro hit its best level to buy Pounds in three months as well as hitting the best rate to buy US Dollars in three weeks.

The European Central Bank once again kept interest rates on hold but made suggestions that the QE programme could be coming to an end as current and near term economic prospects are favourable. Draghi did suggest that Asset Purchase will run until the end of September or beyond but he also used the phrase ‘if necessary’ which caused the Euro to strengthen.

Indecision to slow European Financial infrastructure

Eurozone Economic Data release to dominate Euro exchange rates

Unlike with the UK there are a large amount of important economic data releases due this week that are likely to impact the Euro. Arguably, Wednesday could be the biggest day of the week starting first with German inflation data due out at 7am.

The expectation is for 1.4% year on year and as Germany is the leading economy in Europe as inflation is under control then this is another justification for the European Central Bank considering ending their QE programme so a strong release could strengthen the Euro against the Pound.

As Europe has been growing at its best levels in ten years back in January I think all these data announcements could provide support and this could send the Euro in an upwards direction against both the Pound and the US Dollar.

With the European Central Bank having suggested an end to the QE programme, Eurozone inflation due out on Friday could see a very volatile end to the week for Euro exchange rates. Inflation is one of the key concerns for a central bank and with the expectation for 1.2% year on year anything different could cause a lot of movement so make sure you’re prepared to move quickly.

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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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. 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.