This Euro update examines factors that could affect exchange rates in the coming weeks. In the table below you’ll see high to low Euro exchange rate movement when exchanging £200,000 to Euros for the current year to date.

Currency Pair% ChangeDifference on £200,000
GBP/EUR-1.1%€2,528.70

UBS analysts offer their predictions

Yesterday analysts at investment bank UBS gave some startling price forecasts for the Pound to Euro exchange rate this year, whilst also offering their reasoning behind the predictions.

They offered a number of potential outcomes but the most startling was the Pound to Euro rate falling below 1 for 1 within a year. This could happen if UK corporates see a reduction in revenue generated overseas and also if a Hard Brexit approach results in adverse trading conditions.

Their best case scenario for the Pound against the Euro is a move above 1.20 which isn’t a trading level we’ve seen in around 11 months now. This outcome would be brought upon GBPEUR if UK corporates continue to see large inflows which of course is dependent on trading conditions overseas. Interestingly UBS believe the Pounds recent climb (prior to the narrowing in the election polls) can be put down to this very reason.

Impact of QE on EUR exchange rates and data due out this week within the Eurozone

Inflation levels within the Eurozone have recently dropped to 1.4% down from 1.9% around this time last year. This is below the European Central Banks target of 2% and therefore reduces the chances of the ECB limiting its current QE program.

Despite the drop four members of the ECB discussed the possibility of tapering the current easing program, and although I don’t expect changes in the immediate future I do think that the Euro could spike upward in the wake of QE tapering.

Later this morning at 10am Producer Price Index figures will be released for both the year and the month of April. The figures will cover the change in prices for domestic producers of commodities and increases are expected but expect any deviations from these forecasts to result in movement for Euro exchange rates.

For more information on how future data releases could affect your Euro 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.