The EUR has continued to make strides against both the Pound & USD of late.
GBP/EUR rates dropped yesterday below 1.13, with the single currency gaining further traction this morning.
EUR sellers will be keen to see how much further the market could move and those clients holding Sterling should, as advocated in my previous posts, look to protect their position wherever possible.
The EUR has found further support this week following comments by European Central Bank (ECB) president Mario Draghi, who indicated that the current monetary policy (QE) programme was having a positive effect on the Eurozone economy. This in turn means that we could see the current Quantitative Easing (QE) wound up, when the extended deadline is reached at the end of this year.
QE is put in place to help support an economy by injecting additional funding into it and is generally viewed as negative by investors. This is due to the fact the economy in question could be struggling and requires external assistance. However, when the aforementioned money ultimately has a positive effect, then it can show a recovering economy and this in turn is reflected in investors risk appetite, which is likely to increase.
Whilst the current global market remains uncertain and the EUR itself is susceptible to many external factors, not the least the outcome of Brexit, we are currently seeing the EUR ride the crest of a wave.
Personally, this is why I would be very keen to take advantage of the recent improvements against both Sterling and the USD, rather than gamble on a continued sustained upward curve when many questions remains unanswered.
We need to remind ourselves that the negatives of Brexit are certainly not one-way traffic. Whilst the UK is currently struggling due to the uncertainty of how the negotiations will progress, the EU will also have to ask themselves similar questions.
This in turn could put pressure on the EUR further down the line, so why take the gamble when the current sell prices look so attractive.
Similarly, with Trump’s healthcare & tax reforms gaining some momentum and support in the US, alongside another prospective interest rate hike by the Fed, the USD could start regain some of its recent losses against the EUR.
Therefore, I would remove any uncertainty whilst reminding ourselves the current levels are in part due to the uncertainty surrounding the UK economy, not just an overriding market confidence in the Eurozone.
Due to the current volatility now is the time to contact a personal currency broker and here I can help guide you through this turbulent market. I assist my clients with the timing of their currency transfers, to ensure that any market value is maximised.
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