Growth figures for the EU for last year surpassed the growth seen by the UK, which has been demonstrated in the Euro's gains against both GBP and USD. As we move further into 2018, further monetary policy updates from the ECB have the potential to increase the Euro's value further. The table below shows the difference you could have achieved in Euros when buying £200,000.00 during the high and low points of the past 30 days. 

Currency Pair% ChangeDifference on £200,000

How will the Euro react if the ECB cut their QE programme?

The Eurozone economy, and indeed the Euro, has gone from strength to strength in recent months, with last year’s growth figures showing that the single economic area grew by 2.5% last year - the best for 10 years - and way out in front of the UK at 1.5%. In turn we have seen the Euro gain against the Dollar and Pound and offering some excellent opportunities for any clients selling Euros.

Later on this year that trend could be set to continue, with the ECB (European Central Bank) looking increasingly likely to end their current Quantitative Easing programme by the end of this year. they recently halved their asset purchasing to €30bn per month, which saw the Euro make gains against its major counterparts, and if they do terminate the programme altogether we could see further gains for the single currency. 

Euro Falls Against the US Dollar

Cutting the amount of money pumped in to the economy would reduce the amount of currency in supply and therefore you would expect the currency in question to strengthen as it would therefore increase demand. On Friday inflation figures will be released and these will certainly be taken in to consideration when the ECB come to deciding when they should terminate their QE programme and potentially raise interest rates in the future. 

Inflation is currently below the bank's target of 2% and sits at 1.3%. With the Euro being particularly strong of late it is unlikely that we will see any large upturn in inflation this week. If the inflationary outlook doesn't show signs of rising could this affect the ECB's monetary policy decisions going forward? This data release could have a big impact on the value of the Euro over the coming weeks and is something worth keeping an eye on for anyone with a Euro exposure.

Political uncertainty could still harm the Euro

The Euro is also likely to be driven by political uncertainty in the coming weeks, with questions still hanging over a coalition being formed in Germany and the upcoming Italian election at the beginning of March. With support falling for the SPD party in Germany and party members going to the polls on Tuesday to vote on whether they should once again partner with Angela Merkel's party, there could be some heightened volatility for the Euro. The polls are still very evenly split in the Italian elections with a hung parliament set to be the most likely event in a recent poll by Bloomberg economists, this could also weigh on the Euro's value ahead of their election on March 4th.

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.