Key economic releases and Friday's banking stress test could put pressure on the Euro today and tomorrow, could we see an upturn in GBPEUR exchange rates?

Euro benefitting from GBP downturn

The EUR continues to benefit from Sterling’s demise but with momentum starting to shift in recent weeks, it may be time for EUR sellers to lock in their positions and not gamble on what has become an extremely uncertain market. Whilst there is a concern in the UK that the Pound will lose further value should the BoE cut interest rates early next month, this is still a gamble and not a guarantee. Even if we do see a UK rate cut the EUR has its own problems to contend with, as confirmed by its current trend against almost every major currency apart from GBP.

The EUR is under pressure because the markets are having to factor in the loss of one the EU’s integral members. The UK’s decision to leave the EU is going to have as big an effect on the Eurozone economy as it does on the UK, possibly even greater. This is not being viewed in a positive light by investors and the EUR is struggling to make any sort of impact against the USD, CHF & AUD. I do expect these struggles to impact GBP/EUR rates but for the time being the markets are still viewing the Eurozone’s problems as the lesser of two evils. Exactly how long this stance will continue for is hard to say but I would not be gambling on another aggressive spike and take advantage of some of the best levels Euro sellers have had over the past 3 years.

Fears over Greece & Italian economies could drive Euro value down

With rumours that Greece are struggling to meet their next repayment deadline and the focus shifting to Friday's Eurozone bank stress testes, where Italy’s banks in particular are under huge strain, I just feel here is too much uncertainty to gamble on the current market. You can protect yourself with one of our forward contracts and then sit back and enjoy the gains you’ve made over the past six months.

Looking at the key market triggers for the rest of the week and today’s Consumer & Industrial Confidence figures could be key to any further short-term EUR gains. If these show any upturn on expectation expect the EUR to gain value as a result. However, it is likely to be Friday that will hold even more weight with investors as we have the latest Eurozone GDP figures & official Unemployment rate. Both sets of data could cause additional volatility on the exchange, so clients should stay in close contact with their currency broker ahead of these releases.

For more information on how Euro economic releases could affect your currency requirement this week, call our trading floor on 01494 725 353 or email me here.

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