The EUR has found plenty of support during the early part of the trading week, making gains against both GBP and the USD.
GBP/EUR rates have hit 1.1245 this morning, over a cent lower than yesterday’s high of 1.1346. The catalyst for yesterday’s improvement was a drop in UK Services data, coupled with the same releases for the Eurozone, which came out at a reading of 58. This was above the markets expected result and helped to boost the Euros value, with the pair moving back below 1.13.
Despite some weaker than expected Eurozone Retail Sales figures EUR/USD has also improved, moving back above 1.24.
It has been well documented that the Eurozone economy has outperformed expectation at almost every turn, providing the platform for the EUR improvement over recent months.
The European Central Bank (ECB) and its President Mario Draghi have remained steadfast in their commitment to the current monetary policy (QE) programme, which they feel has helped support the Eurozone economy through a time of economic uncertainty.
Draghi believes that the results are clear and that the Eurozone economy is now starting to progress because of this.
It was interesting to note that none of the ECB members felt the need to talk down the EUR, which they have been known to do in the past for fear of it becoming over-valued. This in turn will have a negative impact on exports of the Eurozone’s goods & services, due to the fact that they will become too expensive for trade partners to buy.
Whilst it is clear that the EUR is enjoying a good run, the Pound and USD have gained a foothold over recent weeks. With so much uncertainty regarding Brexit negotiations and how the EU itself will fare once the UK leaves the single bloc. I expect increased strain and volatility on the currency markets.
As such it may be worth removing any risk and taking advantage of the current levels, which remain extremely attractive, particularly when you consider the relative history on the pairs.
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