The value of the Euro has been falling over the last 7 days against the Pound making it cheaper to buy. GBPEUR rates have climbed by a cent over the last 7 days giving Euro buyers an extra €2,400 on a £200,000. Today's Euro report discusses ongoing trade negotiations between Europe and the US, along with an update on the recent interest rate decision from the ECB. The table below shows the range of GBP-EUR exchange rates for the last month, showing the difference in Euros you could have achieved when selling £200,000.00 during the high and low points during that period.
|Currency Pair||% Change||Difference on £200,000|
The topic of trade wars has been widely talked about recently with focus on Trump over the media. The implications of an all-out trade war between Europe and the US could well be significant and have widespread implications but following a meeting between President Trump and European Commission chief Jean-Claude Juncker this week the risks seems to have reduced. In their closing press conference, they announced a ‘new phase’ in EU-US relations. President Trump had threatened to impose tariffs on European cars which had weakened the Euro as a result but this better news recently helped the Euro strengthen. The US tariffs on foreign steel and aluminium remain interesting however.
The European Union has also had some success recently elsewhere in the world with regards to world trade after signing the world’s largest bilateral free trade agreement with Japan last week. The EU-Japan trade deal will eliminate about 99% of tariffs on Japanese goods while Japanese consumers see benefit on the $100bn worth of goods and services the EU exports to Japan every year.
Yesterday we had the latest update from the ECB where they kept interest rates and its central policies unchanged as expected. They had only last month confirmed that they plan for the QE program to conclude this year with a reduction from the €30bn to €15bn of bond purchases after September. ECB President Mario Draghi also suggested that interest rates in Europe will now not rise until the end of the summer of 2019.
This was the catalyst for a loss of value of the Euro as it suggests the interest rate differential between the UK and Europe could be much wider than though in the years ahead, remembering that the UK is expected to raise interest rates later this year.
Over the coming week the value of the Euro will probably be driven by the data released next week. On Monday we have business confidence figures, Tuesday key GDP figures, Wednesday sees Manufacturing data, Thursday Producer price figures and on Friday Retail figures. The largest event will probably be GDP figures on Tuesday, this is expected to show an improvement resulting in the Euros value to most likely climb this coming 7 days making it more expensive to buy.
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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