The ECB have said that the expected change to current QE measures could take longer than predicted as a result of struggling inflation. This Euro report looks at how inflation is likely to affect the single currency. The table below shows the difference in Euros you could have achieved when buying £200,000.00 during the high and low points of last Monday.

Currency Pair% ChangeDifference on £200,000
GBPEUR0.4941%€1140 EUR
Germany’s manufacturing sector continues to struggle

ECB QE cut could be put on hold

The European Central Bank (ECB) had been widely predicted to cut their Quantitative Easing (QE) program this year.

QE is an unconventional form of monetary policy that is carried out in order to stimulate an economy when interest rates are low. The ultimate goal by doing so is to boost spending to hit an inflation target of 2%. It has been widely hinted that the ECB would be cutting their QE program completely by the end of 2018. This has been one of the main reasons for the Euros strength of late.

The ECB last week stated that struggling inflation could well put on hold any cut from the current €30bn monthly increments and the Euro suffered as a result.

If I were a Euro seller buying Sterling I would be considering moving at current levels, despite the possibility of further falls due to Brexit uncertainty I think we could be witnessing new buoyancy levels above 1.15 which is a concern for Euro sellers. I do not now think we will hit as low as the 1.12s again based on current market conditions.

It is important to keep in mind Euro sellers are only in this favourable position due to Brexit. Pre –Brexit levels were higher than 1.42.

Inflation Data could influence a change in QE

Consumer Price Index (CPI) data is a key measure of inflation and is due to land tomorrow morning.  This could be very influential to Euro value as inflation has been stated as a reason behind stalling on a cut on QE. Data is expected to land at 2.4% the same as last month, but should we see a fall the Euro could well lose value as the probability of a cut in QE seems less apparent.

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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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.