Getting the best exchange rate can be achieved by understanding what is driving rates and the service of a specialist currency broker. Below are movements in just a month affecting US Dollar rates when buying £200,000:
|Currency Pair||% Change||Difference on £200,000|
The European Central Bank (ECB) interest rate decision is pending today and this event is likely to have the largest impact on the value of the Euro for the remainder of the week. Interest rates are not expected to change but the market will still be keenly watching the release for hints towards future central policy change across Europe.
Special focus will be on the European QE program which was cut to €30 billion a month last year. Following the great gains for the EU throughout 2017 there is a growing view that the level of support through this policy may well may be cut again in the months to come. Any hints towards a cut in stimulus will be seen as a boost, and would likely strengthen the Euro making it more valuable and expensive to buy.
Euro sellers may well want to wait until after the ECB announcement as it gives little risk but potentially could strengthen your position.
Mario Draghi, the head of the ECB, spoke earlier this week and failed to give any hint towards policy change, so it would be a surprise if information was given during the pending meeting. In real terms I expect either: no information to be given and therefore no real impact on the value of the single currency, or more clarity on when a further cut of stimulus may come, is which case the Euro would likely strengthen. As a result if I was looking to buy the Euro I would see this as a risk.
Over the last few weeks the tone of Brexit negotiations seem to have turned more favourably for the Pound. Both Spain and the Netherlands have suggested a fairer deal for the UK will be needed which was supported by comments from the Norwegians at Davos on Tuesday of this week. Plus with the UK government having more of a say following the Westminster vote late last year, it seems the European Union have a softer stance, which is strengthening GBP and weakening the Euros value.
There seems to be a trend of data being released suggesting how painful the Brexit bill could well be for the Europeans. For example according to Oxford Economics, the cost of rerouting EU supply chains in the event of a ‘no deal’ Brexit scenario could cost the EU as much as £100bn. With Brexit negotiations expected to be in the main stream media once more in the near future I personally expect Sterling rates to remain under pressure. Brexit transitional negotiations start as soon as next week with trade discussions starting at the end of March.
Thank you for reading my Euro currency report, if you have any questions about Euro exchange rates I would be more than happy to discuss them – you can contact me with any queries on 01494 725 353 or by emailing me here.
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