GBPEUR rates have remained very changeable of late. A lot of this movement has been from the continual changing view given in the Brexit negations and therefore what the relationship between mainland Europe and the UK could well look like in 6 months' time. Domestically within the Eurozone however economic activity is equally showing some worrying signs. More on how this data has impacted exchange and an outlook for figures coming out for the rest of the week in the Euro report below, with the table showing the range of Sterling Euro exchange rates for the past month, highlighting the importance of timing your transfer to maximise on your return.
|Currency Pair||% Change||Difference on £200,000|
Recent data being released within the Eurozone has suggested that there may be a softening in the amount of growth across the block. Manufacturing activity is also now at its lowest levels in more than 1½ years and consumer confidence dropped sharply in August. The main members of the Eurozone that are seen as the biggest contributors to output; Germany, France and Italy, have all had their growth forecasts downgraded last month. All signs that concerns are mounting about a slowdown in the region. Personally, I don’t think this will give GBPEUR a boost as Brexit negotiations are really a much bigger influencer to price but it is a topic to be aware of moving forward.
Italian banks have also been continually highlighted recently as a worry for the future and arguments are mounting that this could be the next problem in the Eurozone. The banks there were originally hit following the Turkey story a few weeks back. When Turkey was at the peak of their recent troubles, the contagion risk spread to Europe due to how much exposure the banks have.
Additionally, with the populist coalition Governments new spending plans being widely seen as ‘cobbled together’, many investors have moved out of Italy. Italian equities are down over 15% over the last 3 months and Italian debts is at the highest level of interest in 4 years.
Moving forward it will be very interesting to see how the Italian debt market is managed when the QE program finishes towards the end of the year. Currently a huge proportion of Italian debt is bought by the monthly QE program from the European Central Bank (ECB) and worries are mounting as to how Italian finances will add up when the largest buyer of their debt is no longer in the market.
This is a story to be aware of but I personally don’t expect it to really be a large influencer in the price of moving GBPEUR until November/December time. It could well be over shadowed by Brexit negotiations at the time depending on the exact timelines of both stories, but I personally think it is an issue which will be front page news as we get closer to Christmas.
Outside of politics and Brexit, GBPEUR rates in the short term could well be impacted by economic data coming from Europe. Yesterday we had a number of key releases from Germany which again showed some concerns and weakened the Euro making it cheaper to buy, this was factory orders which were below expectation.
Today’s focus for Europe is very much GDP figures which are released at 10:00 BTS. This is expected to show no change but with the building worries about the performance across the block a contraction could be announced which in turn could give GBPEUR clients an opportunity before the weekend.
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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