The Euro found support following Draghi's speech yesterday. He remains confident that the Eurozone will cope well following the UK's decision to leave the EU.
The Euro climbed to just shy of a 5-year high against the Pound during yesterday’s trading, mainly due to frailties from the UK economy and the ever looming Article 50, but a bullish speech from Mario Draghi yesterday afternoon also helped the single currency make inroads against the Pound. The head of the ECB claimed that the Eurozone has coped well since the Brexit vote in June and the economy has proven ‘quite resilient’.
He also stated that the Eurozone’s policy of low interest rates has helped the economy avoid a period of deflation. These comments followed on from a huge rise in Business confidence in Germany yesterday morning, with one economist claiming "The German economy is expecting a golden autumn”.
Inflation has been the hot topic across the Eurozone in recent months, with the ECB introducing a boost to their Quantitative Easing Program and cutting interest rates in an attempt to increase consumer prices but to little effect. On Friday however, we could see the single currency make further gains against the Pound as inflation figures for September are set to show an improvement. For anyone buying Euros in the short-term, now is more important than ever to speak with your broker here and put a plan in place to help remove the uncertainty from this volatile market. One of the many options available to you is a forward contract, allowing you to lock in an exchange rate now ahead of a property purchase which will give you peace of mind when budgeting.
Anyone selling Euros may also be sensible to act cautiously, as the Euro is still showing signs of fragility. Inflation is still way below the bank’s target, and if the ECB are forced to act in the future to increase their Quantitative Easing program then we could see the Euro’s gains start to unravel. Mario Draghi is set to deliver another speech tomorrow afternoon, so anyone with a Euro requirement should monitor his comments closely as he may allude to future monetary policy and it is likely that we will see some market movement on the back of his address.
Get in touch with us on 01494 725 353 to discuss any Euro requirements you may have. With markets this volatile, a contract option could be worth considering.
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