Comments from the ECB President Mario Draghi yesterday points towards the end of current QE in the EU, this would usually have lead to strength for the Euro but this wasn't the case. This report discusses the factors affecting the Euro currently; the table below shows the difference in Euros you could have achieved when buying £200,000.0 during the high and low points of the last month.
|Currency Pair||% Change||Difference on £200,000|
The Euro strengthened slightly yesterday afternoon against the Pound following from the European Central Bank’s Interest Rate decision where it was announced that rates would be kept on hold at 0% as had been widely expected. Investors were keenly watching for any positive hints for the Eurozone economy, and they were not left disappointed when Mario Draghi, President of the ECB, provided his biggest sign yet that the bank is on track to end its huge bond buying programme by the end of 2018. He suggested this could even be as soon as September. In theory this positive news should have strengthened the Euro considerably, as it would seem that its QE programme has succeeded in getting the European economy back on track, however it actually lost ground against the Pound and US Dollar over the course of the afternoon.
The main reason for this was due to concerns over Donald Trump’s tax tariff proposal, which could potentially put the entire world at risk of a recession. In times of global uncertainty, the US Dollar usually benefits as it is viewed as a safe haven currency. As these tariffs would directly affect the EU, investors moved their funds away from the Euro to the safer US Dollar, which caused Euro weakness. Trump announced yesterday evening from the White House that tariffs would be placed on countries importing steel and aluminium into the US, and noted that he proposes to hike tariffs on cars imported from the EU, which could have dire consequences for the European economy if these tariffs are agreed to.
Key sets of data to watch out for next week include German inflation readings for February released on Wednesday at 7am. As Germany is the largest economy in the Eurozone, any deviation from the previous 1.2% could result in Euro swings. This is followed by Industrial Production figures at 10am. Arguably the most important data release of note will be on Friday when Inflation for the whole of the Eurozone will be released, however with plenty of other global factors likely to impact Euro exchange rates between now and then, get in touch with us today to help you to time any short to medium term Euro currency transfers.
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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