The euro has been weaker in 2019 but with a slightly less negative outlook on the horizon, has rebounded in the last week. The most recent European Central Bank (ECB) meeting was not as pessimistic as it might have been, leading to the single currency finding some support. With the US dollar finding itself under some fresh pressure as the US might have to consider interest rate cuts, the euro has bounced back against most currencies.
|Currency Pair||% Change (Month)||Difference on £200,000|
Today, Mario Draghi, President of the ECB, will give a speech which could be interesting in dictating sentiment for the day ahead. On numerous occasions in the past, the ECB has been seen to be too optimistic, only to be wrong footed later by changes in the economic data.
Later this week is Italian and French Inflation data which might help to provide more detailed news on where the economic data is heading. The ECB is also conscious about the ongoing trade wars, and how that might impact the Eurozone economy. Trump attacked the euro yesterday in a tweet, saying it was ‘devalued’ against the US dollar, a possible sign of future troubles for the euro.
Other concerns are political in nature, with the far-right Vox Party in Spain, gaining some seats in the Madrid government, forming a coalition. Such uncertainty ahead could weaken the euro, as investors remain fearful over the political outlook. The European elections proved that politics is increasingly sliding away from the more centrist ideology that has underpinned confidence in the Eurozone for so long, increased political uncertainty from more extreme parties will likely weigh on sentiment for the single currency.
The recent optimism for the euro, coupled with increasing Brexit uncertainties has taken the interbank rate to the best rate in 5 months to sell euros for pounds. The interbank rate is currently less than half a cent off this point, which was reached on Monday, and this could be attractive for clients interested to sell euros for pounds.
This news is unfortunately not helpful for euro buyers who are struggling with the weaker pound, but it is worth pointing out we are still 2.5 cents higher than the levels of the start of 2019. Based on the interbank rate, €200,000 today worth £4,000 less than at January 1st, 2019, the pound is therefore still holding its nerve, to a degree.
Whilst there could be a desire to hang on longer if you need to buy euros with pounds, the rates may fall further. As the example above demonstrates, we have been lower this year and a quick scan of the UK headlines on Brexit leaves little to inspire too much confidence for the pound.
The pound may well dip lower before it rises, so clients with a position buying or selling may wish to make careful plans. It seems the ultimate performance for the pound is likely to be linked to Brexit developments and the lack of firm news may continue to hold sterling back.
Fantastic service by Jonathan and his team. I feel totally confident in using the service for my foreign currency transfers.
Phone answered quickly and efficiently. Although not available at the time Jonathan Watson returned my call in France very quickly. Business conducted quickly and in a customer friendly and informative manner at all times. All follow up correspondence and confirmation execute speedily & efficiently.
A stress free experience with friendly, helpful staff. Quick transfer. I would definitely use them again. Quick and reliable.