During the European Council meetings taking place today and tomorrow, we also have European Manufacturing data released at 09:00 which is expected to have fallen slightly which could weaken the Euro. The table below shows the difference in Euros you could have achieved when buying £200,000.00 during the high and low points of the past month.
|Currency Pair||% Change||Difference on £200,000|
Today the latest European Council meeting commences and is expected to run for the next 2 days. It initially was the deadline for the transitional deal to be agreed which was released on Monday and helped the Pound gain in strength this week. At this meeting a number of topics will be discussed including future leaderships, Italian politics, the continual migration crises and indeed Brexit.
Brexit topic is likely to be on the agenda for tomorrow and updates on this will continue to have a large impact on the value of the Pound moving forward. Following this meeting official trade negotiations between Brussels and Westminster are expected to Start. Trade will be a big part and driving factor for GBPEUR moving forward.
Personally I have not traditionally seen political negotiations start well and often seen the most uncertainty at the beginning of any talks. I expect in the coming weeks for there to be a re-ignited bout of uncertainty around what the UK PLC’s future looks like which could well put the Pounds value under more stress.
In the longer term most expect the Euro to continue to gain in value. Their economic data has continued to show improvements and pressure has been building on the European Central Bank (ECB) to further taper their QE program. This is the banks effort to stimulate growth after the financial crash a decade ago by putting additional cheap money into the economy. Many now expect a further drop in the amount of stimulus with it theoretically coming to a complete halt by the end of the year. This would certainly be a good sign of improvement within the Euro and is very likely to create additional value making it more expensive to buy. Longer term I expect this to be the case, however the particular timing of this news will impact values medium term.
Only this week ECB president Mario Draghi said he wants to see more evidence of inflationary pressures before dropping crisis-era monetary policy support.
Later today European Manufacturing PMI data is released at 9:00. This is expected to show a fall rather than increase so in turn could weaken the Euro slightly as it would support the argument that tapering of the QE program in the near term becomes less likely.
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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