Has the single currency bottomed out?

Our daily market reports tend to be Sterling focused due to our location, but at times it’s worth taking a different view in order to gauge the markets as a whole and therefore, not looking at the markets from a one-dimensional viewpoint. The reason I’m making this point is that to many it may seem like the Euro is performing well at the moment, having gained so much value on the Pound over the past 6-9 months. In reality the Euro has only just begun to turn the tide as the single currency has actually lost over 4% against the US Dollar over the past 6 months, and at one stage it was actually 6%.

These losses can be put down to a number of reasons, but the potential break-up of the EU, banking crisis in a number of Countries as well as the rise of anti-EU parties in some of the EU’s major constituents has really begun to apply pressure on the currency.

Those hoping to convert their Euros at even further favourable levels against the Pound should be aware of this, as I believe that should the negative sentiment surrounding the Pound suddenly subside, I think that there’s scope for the Euro to lose value versus the Pound specifically.

What to expect this week from Euro exchange rates

The Euro was in low demand yesterday as investors have already begun flocking to ‘safe haven’ currencies such as the Japanese Yen, in anticipation of this Friday’s Trump inauguration.

Despite this I expect to see Euro strength between the GBP/EUR pair if the Supreme Court decision goes in favour of the Government. I also think that if there is still a lack of clarity regarding the UK Government’s Brexit plans after May’s speech later today, we can also expect to see the Euro gain value on the Pound. Moreover, if her plans confirm a ‘Hard Brexit’ bias it’s likely that the Euro will strengthen and I wouldn’t rule out a move below 1.12 if this is the case.

Outside of Brexit-related news I think Thursday’s ECB Interest Rate Decision is worth being aware of, even if no change is expected. The release is scheduled for 12.45pm and there will be a policy statement afterwards.

Clients with a Pound/Euro requirement should consider protecting themselves from exchange rate fluctuations. While the Pound is down against the Euro following Theresa Mays Brexit comments, the Euro remains vulnerable to political and economic events in the early stages of 2017. Talk to our team about the different contract options available to you, as they may save you when it comes to transferring your funds. Call our trading floor on 01494 725 353 or email me here to find out more. If you do not have an account with us, sign up for your free dedicated broker today!


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