The Euro has been one of the worst currency performers recently. Last week the European Central Bank (ECB) confirmed multiple changes to their central policies and forecasts which weakened the euros value.  They pushed back the forecast for their next interest rate change until the end of 2019, their QE program was also extended until maybe the end of the year and lastly they contracted their own forecasts for the region for both this year and next.  This resulted in GBPEUR rates having one its largest daily gains on Thursday that have been seen for months. The table below shows some of the impact on exchange rates during the past month, and the difference in Euros you could have achieved during this time.

Currency Pair% ChangeDifference on £200,000
GBP/EUR1.5%€3,400
A well-timed trade of £200,000 on the day secured clients in excess of an extra €3,000 again highlighting the importance of timing transfers.

Importantly what is worth highlighting is that even though this daily gain for GBPEUR was big, rates failed to reach new highs and the break through the level of resistance at 1.15 that has been in the market since April. As a result I am of the view that this was more of a short term opportunity rather than a long term change in trend and that GBPEUR rates will look at falling once more. I expect GBPEUR rates to remain range bound between 1.13-1.145 for the coming weeks.

Industrial productivity across Europe also recently has shown a fall to 0.9% for March to April, the fourth decline in the last 5 months. We have also seen the EU governments introduce their own tariffs on the US to the amount of €2.8bn on us imports. This was following the US tariffs being imposed on EU steel and aluminium imports. Import tariffs seem unlikely to help anyone in the short term and normally has a real time lag before any benefits are seen, something that will further weigh down the strength of the Euro going forward.

 

Italian Budget Causes Panic for Euro

Could Mario Draghi change the Euros fortune?

Moving forward in the very near future we have a speech from Mario Draghi who is the head of the ECB. Historically when large updates from the bank are released, he calls a press conference shortly after to 'reduce' the impact on the euro’s value and confirm any assumptions which were made. As a result, this is an event for everyone to keep an eye on. My personal take on this event is that it could well bring with it some euro strength so something to be wary of if you are buying the Euro. Mario Draghi is also speaking tomorrow morning so please make sure to register your interest if you have a pending transfer to arrange or exposure to the Euro.

Could Mario Draghi change the Euros fortune?

Moving forward in the very near future we have a speech from Mario Draghi who is the head of the ECB. Historically when large updates from the bank are released, he calls a press conference shortly after to 'reduce' the impact on the euro’s value and confirm any assumptions which were made. As a result, this is an event for everyone to keep an eye on. My personal take on this event is that it could well bring with it some euro strength so something to be wary of if you are buying the Euro. Mario Draghi is also speaking tomorrow morning so please make sure to register your interest if you have a pending transfer to arrange or exposure to the Euro.

German uncertainty starts again

Tensions in Germany's coalition government over migration policy have also hit main media outlets after President Trump started ‘re-directing attention’ away from US domestic immigration policies. Concerns however are mounting about political differences in German as Chancellor Angela Merkel has clashed with leaders of the coalition in place over her refugee policy. Something, which I doubt, will change the Euros value unless the coalition ends.

Economic data to watch out for with the Euro this week

Economic data is due at the end of the week from Europe with Consumer spending due late Thursday afternoon and Manufacturing PMI data on Friday morning. Consumer spending is expected to show a contraction and Manufacturing an expansion. As a result EURO buyers may want to move on the Thursday and sellers on the Friday if these forecasts come in correct.

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.