Yesterday we had the latest update from the European Central Bank (ECB) and their head Mario Draghi. No change was announced in the current level of Quantitative Easing (QE) across Europe and the interest rate, however Mario Draghi’s commentary weakened the Euro. In the following press conference and update from the bank he confirmed that the QE program may well run longer than previously expected.
In the following press conference and update from the bank he confirmed that the QE program may well run longer than previously expected.
This change in tone had a negative impact on the EURO as it suggested its economic health was weaker than thought and needs more support for longer, weakening the Euro and making it cheaper to buy.
GBPEUR levels now sit within a cent of the best levels for a year and ignoring a 7 day period, sit at the highest level seen in 11 months.
In the table below you’ll see high to low GBP/EUR exchange rate movement when exchanging £200,000 to Euros in the last month.
|Currency Pair||% Change||Difference on £200,000|
In the past Mario Draghi has perhaps been a little outspoken and other members of the ECB have softened the tone from the ECB. As a result I would highlight that a further three members of the bank have scheduled speeches through today’s session. Be aware that the recent weakness in the Euro’s price could well evaporate as quickly as it came yesterday.
Today we have a number of releases from the EU that include Services sentiment, Industrial confidence, Economic Sentiment and business climate updates all at 10:00 am this morning (UK time). All of these releases are currently expected to show a contraction which could in turn weaken the Euro slightly.
Generally the tone coming out of Europe seems to have been muted with domestic government challenges taking centre stage over that of the EU dream. For example, the average Spaniard is now richer than the average Italian it was claimed by a recent release by the International Monetary Fund (IMF).
Next week the key days for the Euro are Wednesday and Thursday with the latest GDP figures, unemployment and consumer confidence being released. Even though GDP figures and Unemployment data have been strong at the headline level concerns continue to mount with regards to the Southern member states and the younger generation. This is something that will increase in importance as political uncertainty within member states continue to escalate.
Personally I expect the GBPEUR pairing to be more lead by UK and US factors over the next 7 days. I expect to see GBPEUR rates stay within a range of 1.135-1.16 over the coming week.
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