The start of this week saw The Euro make gains of almost a cent against the Pound on Monday due to the political issues in the U.K covered in the Sterling section of our reports. The table below shows the potential difference in Euros you could have received as a return on £200,000.00 depending on when during the last week you carried out your transfer.
|Currency Pair||% Change||Difference on £200,000|
For the rest of the week we are fairly quiet for economic data within the Eurozone so I would expect that political tensions and Brexit announcements may be the key to this currency pairing as the week progresses.
The pairing has been stuck in the thinnest 6-month range that we have witnessed historically, with nothing appearing to have the raw power to push it out, but there are plenty of events that are due in the coming weeks and months ahead that may finally make the breakthrough.
Any further new regarding political turmoil from the U.K or a really negative response to Brexit white papers could push us out of the lower end of the 1.115-1.15 range fairly quickly, this may trigger the start of a leadership challenge or even another general election so if you have Euros to buy or sell then this could be a key thing to watch this week.
An interest rate hike from the Bank of England is next on the list of possible movers, should the steer their political ship through these testing waters over the next few weeks then Sterling may actually make good gains and push back above the 1.15 level. Good econo9mic data recently has propped open the door for a rate hike on August 2nd.
Any changes to the planned tapering of EU Quantitative Easing may also be another factor that could weaken the Euro, current plans are to end the bond buying program in December so should the ECB move to change this then we may also see Euro weakness.
European debt problems are still fairly rife, and although this has been going on for years without always being all over the media a lot of these problems have not fully gone away and should one of the Eurozone economies fall into trouble in the coming month then there is a chance that we may see Euro weakness from this.
Finally, we have Brexit, this could throw up absolutely anything for either side. With all of this in mind it really is a minefield out there at present if you need to make a large Euro exchange, so sometimes the sensible approach is to hedge your risk and look to buy some if not all of your requirement sooner rather than later to avoid getting a nasty surprise.
Personally, I feel that the economy is supporting Sterling gains but Politics are totally wiping those out, if we did not have these political issues we may be closer to or above 1.15 but whilst they are there the Pound will continue to tread water and may even start to drown if they escalate.
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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