GBP EUR’s choppy trend looks set to continue this week with investors still struggling to weigh up the blocs fragile recent economic releases with the ongoing Brexit talks still clouding the market’s judgement. More information on EU monetary policy and recent unimpressive data releases of late in the Euro report below, with the table showing the range of GBP EUR exchange rates for the past month, highlighting the importance of timing your transfer to maximise on your return.
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Following on from the European Central Bank’s decision to keep it’s monetary policy unchanged last week, Governing Council member Jan Smets clarified the ECB’s stance further, suggesting he is confident that the European bloc will continue to edge closer to the Central Bank’s inflationary target despite the current economic stimulus being halved as of next month.
The Euro’s performance throughout 2018 has no doubt been anchored by an underlying lack of faith from the markets in the bloc’s ability to perform without the stimulus.
Last week alone we saw yet more key inflation figures from France and Italy disappoint, which will certainly have done very little to provide much support to the Euro going into the second half of the month.
As a result, this morning’s Eurozone Consumer price Index Release may prove pivotal. If last week’s readings filter through, the markets will have further justification for caution, potentially prompting another drive for Sterling back towards the pre-summer highs of 1.14.
Of course, looking at the bigger picture, a wider concern for the markets remains the capability of some of the bloc’s members to maintain their economic recovery despite the upcoming tighter flow of money within the bloc.
Greece’s recent positive postings will have provided some value to Euro exchange rates over the summer. The €3.14 billion budget surplus posting from Finance ministry over the last 8 months (target was €920 million) certainly shows real signs of robustness.
That being said, PM Tsipras has already tried to use Greece’s performance to justify a potential unwinding of cuts in Greek pensions, in a bid to improving his popularity readings ahead of the national elections next year. The ECB are yet to officially comment on the request and I doubt any form of acceptance on the matter will sit comfortably with investors. Equally, the more headlines Athens make over the matter, the more pressure we could see on the Euro as a result, certainly something for Euro holders to keep an eye on.
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