Eurozone inflation could reach the European Central Banks target by late 2018 following a recent rise in energy prices according to Mario Draghi, head of the ECB. The official figures for inflation will be released today and could create volatility for the Euro, especially after Mario Draghi’s comments. The ECB has failed to hits its target for the past three and half years, and if the inflation figures on Monday are worse than expected, the ECB’s policies and recent moves such as cutting rates into negative territory, quantitative easing and asset buying scheme could come under scrutiny.
This week is an important week for clients with a Euro requirement. Today the eagerly awaited inflation report will provide an insight into the next move that the ECB will make. If inflation drops, the ECB’s decision not to take further action at last month’s policy meeting will come under fire and could affect Thursdays interest rate decision. Analysts at HSBC are still expecting an extension to the ECB’s stimulus programme but will not come now until December. However, the markets are full of surprises and if today’s inflation outlook is worse than expected then the ECB may have to act sooner than originally planned. With EUR GBP exchange rates still close to 5 year highs for Euro sellers, it would be foolish to miss out on these levels, especially as this week has the capability of reversing the inroads that the Euro has recently made against Sterling. If inflation in the Eurozone disappoints and the UK inflation level moves even closer to its 2% target on Tuesday this could be extremely negative for the Euro and provide Euro buyers with a rare window of opportunity.
With important data releases from both the UK and the Eurozone this week that have the capability of creating swings in the GBP/EUR rate, it would be a wise move to speak to the team at Foreign Currency Direct to work out a strategy to protect you from any potential losses.
Thank you for reading my Euro report his morning. For more information on how this weeks ECB interest rate decision could impact your Euro buying or selling requirement, call our trading floor on 01494 725 353.
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