Sterling is struggling to find support against the Euro but with a number of TV debates surrounding the EU referendum this week, GBPEUR exchange rates may enter a volatile period.
The Euro seems likely to remain supported following the latest European Central Bank (ECB) meeting last Thursday where ECB President Mario Draghi stated that whilst the growth outlook was ‘tilted to the downside, the balance of risks had improved’. Following a series of measures to stimulate the Eurozone economy including Quantitative Easing and cutting Interest rates the ECB remains cautious.
Although by acknowledging the weak outlook there is scope for further measures longer term which may only serve to weaken the Euro. QE is a method of encouraging economic growth where a central bank buys up government bonds. This usually acts to weaken the currency concerned and whilst there is no immediate expectation the ECB will use such methods again longer term it might be necessary. For the time being this is not likely and should keep the Euro stronger.
Whilst GBPEUR had recently risen to some of the best levels in 2016 to buy Euros, current Euro to GBP rates are still very favourable compared to last year when the Euro was much weaker. Assuming a Remain vote is the outcome sterling could see a rise in value indicating the next 17 days before the vote could present some very good opportunities to buy the pound with Euros.
Important Eurozone data this week is the release of the latest GDP (Gross Domestic Product) data which will be released tomorrow morning at 10 am. Throughout the week there will be various smaller tier releases from individual countries in the Euro, the most important release of these being Friday’s German Inflation data. If you have a transaction involving pounds and euros the rate is more likely to be impacted from events relating to the Brexit vote. With a series of TV debates and more polls to be released sterling is very susceptible to any fresh news. With the Leave camp gaining momentum further losses for the pound seem likely and if you have Euros to buy moving sooner to remove this risk seems the safest bet.
Thank you for reading today’s Euro market report, with fresh concerns surrounding the Referendum and a potential for a leave, you may wish to get in touch with me here to discuss contract options if you would like to make a transfer.
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