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 shows the difference in Euros you would have achieved when buying £200,000.00.
|Currency Pair||% Change||Difference on £200,000|
Growth in the Eurozone has been impressive of late. Investor confidence is high and this has caused the Euro to strengthen as a result.
Growth in the third quarter was better than anticipated and this has caused the growth forecast to be upgraded. It is not just the usual suspects such as Germany who are propping up the Eurozone economy, we have witnessed impressive data across the board. Italy for example has also showed higher than anticipated growth.
If we continue to see impressive economic data from the Eurozone we could well see a change in monetary policy. If an interest rate hike becomes more probable this will no doubt cause considerable Euro strength.
Euro sellers may think that everything is looking rosey, but it would be wise to watch developments in regards to Catalonia seeking independence from Spain. If independence comes closer to realisation it will hit Spanish GDP with Catalonia responsible for 20% of Spain’s GDP overall. There are further risks however, if Catalonia does gain independence this could create a domino effect and there is the possibility other regions could follow.
Angela Merkel has failed to form a collation government. Political uncertainty historically weakens the currency in question and that is what we have witnessed with the Euro. There may be calls for a repeat election which could cause further weakness.
Wednesday brings the European Central Bank (ECB) accounts. It contains an overview of financial market, economic and monetary developments. The rationale behind monetary policy is discussed and the meeting can also give an indication to monetary policy moving forward.
German GDP is the engine room of the euro zone economy and as such has more influence on Euro value than its counterparts. It does have the power to influence the markets so keep an eye on the results.
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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