This Euro report will examine the factors that could affect exchange rates this week in order to help you stay informed if you need to make a currency transfer. The table below shows the difference you would have received when buying £200,000 at the high compared to the low during the past 3 months.
|Currency Pair||% Change||Difference on £200,000|
Euro holders will most likely be thoroughly enjoying February so far as positive economic data and another show of political unity from the EU powerhouse Germany has further strengthened the market’s view for the single currency. The Euro has already gained 1.5% against the pound since the start of the month.
One thing preventing the Euro from capitalising on Sterling’s Brexit woes of late has been the slight political uncertainty in Germany that seemed to sap investor confidence throughout January.
Germany remains the powerhouse within the Eurozone so when a lack of direction from the top becomes apparent, the markets will often take a step back and limit their exposure.
Yesterday however, it was released that Chancellor Merkel’s conservatives agreed to a number of key compromises to gain the Social Democrats commitment and renew the Grand coalition.
The main concession being the finance ministry being handed over to the Social Democrats, essentially putting an end to the “forced austerity” regarding Germany’s Euro zone policy. This suggests there will be further plans for expansion with intentions of investment into a European monetary fund already beginning to intensify. The plan is to create added incentives and opportunities for EU members to invest in the bloc. It could well prompt a strong show of unity for the Eurozone and could lead to sustained Euro strength as a result.
This morning sees Europe’s international trade put to the test as Germany’s trade balance is released. ECB President Mario Draghi has previously signalled that a strong Euro will hinder the bloc's exports, out-pricing its goods on the international stage. If his caution is justified, as it looks to be the case, then there is a chance the markets will lose a bit of taste for the Euro, as it distances the chances of favourable monetary policy change.
We are expecting a host of inflation data from the Eurozone at the start of next week. Draghi recently said that he needs to see far higher inflation levels if the ECB is to adapt its quantitative easing. Given this week’s retail sales figures came out strongly, there is every chance we see a pickup in these numbers too. If you are looking to buy Euros, it may pay to look at making a move before this event, just in case Draghi sees the kick in the trend he is looking for.
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 email me here.
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