Will the ECB extend their Quantitative Easing program?

Yesterday afternoon the President of the European Central bank addressed the European Parliament committee in Brussels. The key headlines from the meet, was he believes the state of the Euro area economy proved to be resilient and inflation had gradually risen due to the ECBs monetary stimulus program. Furthermore the ECB would asses ways to continue to improve inflation to the central banks 2% target.

However the President offered little insight into future monetary policy decisions and in particular the potential of an extension to the bond purchasing program also known as quantitative easing on December the 8th.

Many analysts are predicting the ECB will make the extension of 6 months in order to keep stimulating the Eurozone economy and I personally have to agree. It was only last week that two key figure heads from the ECB stated that the ECB need to continue with ultra- loose policy. If an extension materialises next month, I would expect to see a major sell off of Euros which in turn would weaken the Euro.

Economic data releases this week

The Eurozone are set to release a host of economic data the week however the key release that could have a major impact on the Euros value is Consumer Price Index (inflation) released 10am Wednesday. As stated above the ECB believe the Q.E program has helped inflation and a rise to 0.6% from 0.5% is predicted. If this isn’t the case and inflation actually falls then I believe this would cement the decision and the ECB will have no alternative other than to extend the Q.E program in December.

For Euro buyers before the turn of the year, it may be worth holding off and see how the ECB proceed with the Q.E program. If they extend the program I believe rates for buying Euros will improve. However it’s key to note if they leave the program unchanged we could see the reverse and the Euro may make gains against sterling.

Call our trading floor on 01494 725 353 or email me here if you would like to discuss a Euro buying or selling requirement. A number of upcoming events could sway Pound to Euro exchange rates in either direction.

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