With the currency markets moving every two seconds, it can be vitally important to be aware of what is driving the currencies in or out of your favour. The table below looks at the difference in Euros you would have achieved when buying £200,000 yesterday.
|Currency Pair||% Change||Difference on £200,000|
The hung parliament in the UK is of course the main driver of GBPEUR exchange rates today and with some large questions over who will lead the UK, and the implications for Brexit, GBPEUR is flirting with fresh 2017 lows. This is presenting an excellent short term spike for brave Euro sellers who defied the polls and hung on for fresh opportunities to buy pounds.
Further boosting the Euro’s dominance against sterling is the European Central Bank who yesterday met to discuss monetary policy. Keeping their interest rates on hold, Mario Draghi, President of the ECB said they would no longer be looking at any further interest rate cuts.
Whilst no talk was made of introducing the QE ‘taper’, the ECB confirmed the current QE plans would continue, and in talking up the future projections for the Eurozone economy and indicating that the deflation risk had ‘definitely gone away’ the Euro did find support.
Tough questions now hang over the UK as a government needs to be formed. Forming a coalition government took 5 days following the 2010 General Election but it is not as straight forward this time with no obvious coalition partners and Brexit negotiations looming. There are now a number of scenarios which might take place which could see some surprise movements, just like we saw in 2010.
To add to the political drama in the UK, next week we have the latest Eurogroup meeting about Greece. Expectations are for the Greek government to continue to seek some growth boosting actions which will help turn the tide on the Greek’s tough financial position. With the IMF keen to seek debt relief but Germany unlikely to support this ahead of the German election, there could be potential Euro weakness in sight.
Nonetheless with Eurozone GDP (Gross Domestic Product) having improved to 0.6% for Q1 whilst the UK's was revised down to 0.2% it is not just politics which is giving the Eurozone the upper hand against the UK and the pound.
The coming days and weeks are going to be interesting on both sides of the Channel and as a result will mean continued volatility for Sterling Euro exchange rates.
For more information on how future data releases could affect your Euro requirement, call our trading floor on 01494 725 353 or email me here.