Following the Bank of England decision to keep interest rates on hold yesterday, and the announcement that headway has been made to ease political tensions in Italy the Euro saw gains against the weakened Pound. This market report will discuss how factors such as this can impact the Euro; the table below shows the difference in Euros you could have achieved when buying £200,000.00 during the high and low points last month.

Currency Pair% ChangeDifference on £200,000

New Italian Prime Minister to be decided by Sunday

The Euro benefitted from a weakening Pound yesterday after the Bank of England decided to keep interest rates on hold at 0.5%, allowing our well-informed clients the opportunity of saving €2,000 on a £200,000 purchase when timed at the high compared to the low of the day.

Another factor which helped the Euro to strengthen yesterday was due to significant progress being made in Italy, Europe’s third largest economy, as the anti-establishment party 5-Star Movement and far right League parties made headway in resolving 9 weeks of political tensions. League party Leader Matteo Salvini and 5 Star Leader Luigi Di Maio made a statement yesterday to inform that the two parties have entered into negotiations to decide on a new Prime Minister, just before they would have been forced to return to the polls. The current President Sergio Mattarella has implemented a deadline of this Sunday for a decision, so I would expect Euro volatility depending on the outcome.

As this announcement is expected at the weekend and outside of usual trading hours, a Limit Order contract could work for you, allowing our systems to automatically book your currency if your desired rate becomes available.

German data expected to show improvement in economy

Mario Draghi to speak this afternoon

Investor’s focus will be shifted towards European Central Bank (ECB) President Mario Draghi’s speech in Florence at 2.15pm today. Lately when Draghi has spoken, he has delivered a message of cautious optimism which has created nervousness amongst investors. The Economic Bulletin recently stated that the European economy continues to show solid expansion, however Inflation has remained lacklustre and this will likely be one of the main topics covered in Draghi’s speech.

Any hints towards any future changes to monetary policy, including any signals towards, or indeed lack of clarity towards reducing its huge bond buying programme could result in Euro volatility.

Looking ahead, the key economic releases to impact Euro exchange rates next week include German and European Preliminary Gross Domestic Product (GDP) figures for the first quarter of this year on Tuesday, followed by Inflation readings for Germany and the whole of the Eurozone on Wednesday. German releases are noted due to Germany being the largest economy in Europe. Both releases are key to deciding future monetary policy and will be keenly watched by investors and the European Central Bank alike.

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.

Download our monthly currency report

Download here


Read more articles
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.