With the currency markets moving every two seconds, it can be vitally important to be aware of what is driving the currencies in or out of your favour. The below table displays the difference in Euros you would have achieved when buying £200,000 over the past 7 days.
|Currency Pair||% Change||Difference on £200,000|
For those holding euros, I am still a strong believer that the Euro’s value in 2017 will be dictated by the European Central Bank’s commitment to reinforcing the single currency’s attractiveness on the international stage. Offering higher returns for investors by gradually raising interest rates is a key factor in doing so.
Recent strides from the Euro can for the most part be attributed to political uncertainty in the UK since the general election, with the pound consistently finding support in the high 1.12s. For Euro holders to see that mark broken sustainably, it is imperative the ECB is able to maintain interest rates at a similar level to its major central bank counterparts, the Federal Reserve (USD) and the Bank of England (GBP) sitting at 1.25% and 0.25% respectively.
The difficulty of course is that by raising interest rates, the ECB would make borrowing, and as a result growth, far more difficult. A dangerous balancing act when faced with the financial fragility in Greece and Italy where further bailouts seem more likely than not.
Yesterday, ECB president Mario Draghi helped the Euro drive by almost 0.60% hitting the highest rates seen in 2017 against Sterling, resulting in an extra £1,400 on a €250,000 transfer.
By suggesting growth in the eurozone is no longer as dependent as it was once was on extra financial stimulus, Draghi made the prospect of a near term interest rate hike seem far more likely.
Consumer and business confidence reports from Germany and Italy have already come out stronger than expected so far this week, if similar surprises follow from Portugal, Spain and France then the Euro should strengthen further. It may pay to get in touch with your account manager here to make sure you are in a position to capitalise on the next spike in the market.
For more information on how future data releases could affect your Euro exchange, call our trading floor on 01494 725 353 or email me here.
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