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 table below shows the difference in your return when buying £200,000 for the last 30 days.

Currency Pair% ChangeDifference on £200,000
GBP/EUR4.2%€9,600

Coupled with the ongoing election hampering the Pound’s strength against the Euro last week, some of the fall in GBP/EUR rates to the lowest levels since March could also be in response to some single currency strength. Data from the Eurozone has started to show signs of improvement and inflation figures have remained steady, which last week prompted reports that the ECB could be looking at tapering their current levels of QE at their next meeting on Thursday 8th June. This has a direct impact on the value of the Euro, as if QE is tapered it suggests the economy is improving and it would also reduce the supply of the currency, therefore boosting demand.

Draghi’s comments weaken the Euro

Mario Draghi came out earlier this week however and quashed the chances of any change in monetary policy next week, stating that even though the state of the economy is improving, there still needs to be substantial levels of stimulus to get inflation back to the ECB’s target of 2%. I believe that this could have also helped the Pound recover some of its losses from last week and with the ECB’s next meeting being so close to the UK general election, I think that we could be in for a very turbulent few weeks for GBP/EUR rates. If for example the Conservatives win a majority and the minutes from the ECB’s meeting are dovish, I believe we could see Sterling head back towards 1.20. With this in mind, I would urge any clients who are selling Euros in the short-term to consider their position now whilst rates are so lucrative.

Euro could drop if inflation data disappoints

There is some key data released from the Eurozone today at 10:00am in the form of unemployment figures for April and inflation data for May. Unemployment is set to show an improvement with a slight drop compared to previous figures. The inflation data is probably more significant, especially since it is so closely linked with next week’s ECB monetary policy meeting, and following on from Draghi’s speech on Monday. The general consensus is that we could see a slight drop compared to previous figures, which would bolster Draghi’s sentiment form the beginning of the week and also makes the change of any change in policy next week more unlikely. As a result we could see a shot in the arm for GBP/EUR and therefore a good opportunity to take advantage of for EUR buyers.

Thank you for reading today’s market report, I would greatly appreciate any feedback you have and would take pleasure in replying personally. I am more than happy to assist you with any of your currency requirements. Feel free to e-mail me here.

The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.

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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.