The ECB kept interest rates on hold in their latest interest rate decision meeting, but hinted that the current QE programme could be coming to an end. This Euro report looks into how this is likely to affect the currency in the coming months. 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 30 days.
|Currency Pair||% Change||Difference on £200,000|
Last week the European Central Bank released their latest interest rate decision and monetary policy statement. No surprises interest rates remained on hold, however the ECB removed the terminology ‘easing bias’ from the policy statement, which gave off the impression to investors that the time of low interest rates and quantitative easing is coming to an end. Many economists and forecasters are predicting the removal of QE by the end of 2018.
In recent weeks the President of the European Central bank has indicated that the devaluation of the US Dollar is having a direct impact on the strength of the Euro which is a concern. Therefore, I wasn’t surprised that the President talked down the change to the policy statement and actually stated the amount of QE purchased each month could increase, however I believe this was in a bid to devalue the Euro.
This week’s inflation data released Friday morning at 10:00am will be watched closely by investors. With the Euro continuing to strengthen against the US Dollar since the turn of the year, I find it difficult to see how inflation will rise any higher than last month’s 1.2% figure. Nevertheless, 1.2% could be seen as a positive which could help the Euro’s value.
The other key data releases to look out for this week are German inflation numbers at 7am Wednesday morning and Mario Draghi’s speech 08:00am also Wednesday morning.
It was heavily publicised last week in our market reports that following the Democrats’ defeat last week in the Italian general election, the Euro could come under pressure in the weeks to come. No surprises that Ex-Prime Minister Matteo Renzi resigned after the defeat, however reports are suggesting that the democrat party need to focus regardless, as the party could be the key for forming a coalition government with either Five Star Movement or Lega Nord. Formal coalition talks are set to begin on the 23rd March, therefore for any clients involved with a euro exchange towards the end of the month should keep a close eye on developments.
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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