Category Archives: Euro Strength
The EUR had broken through 1.25 against GBP earlier this week but the spike was short lived, with the latest Bank of England (BoE) minutes pushing the Pound back above this threshold. The EUR made gains against Sterling earlier this week primarily because UK inflation data came out worse than expected, which in turn pushed the Pound’s value down. This is interesting as it shows when the EUR has strengthened recently it is not because any specific market confidence in the single currency.
Poor Eurozone PMI data released today will do little to change the perception of a EUR, which has been handicapped by a struggling, stagnant economy. GBP/EUR looks likely to remain range-bound between 1.23-1.27 in the short-term and I do believe the EUR will find protection in this range.
EUR/USD rates remain above 1.30 for the time being but with the recent improvements in the US economy, including yesterday’s Federal Reserve minutes, this level could soon be breached.
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The Euro appears to be on course for future losses which may manifest in the next month or so owing to continued pressure on the Eurozone economy to show some improvements in their economic outlook. Some months ago we were in a similair position and Marios Draghi announced a range of measures to ease liquidity in the Eurozone – that is making money more cheaply available to try and stimulate the economy. Unemployment is still a big problem in the Eurozone and boosting growth will help to combat this problem.
The cutting of their base interest rate has so far failed to ignite the economy and stave off the deflationary pressures in the Eurozone. Last month’s data has so far all been rather worrying and I am of the opinion anyone holding out expecting larger moves back in their favour in the future should beware of the risk involved. If you look at the historic charts the GBPEUR rate used to be much higher in the past flirting with levels of 1.50 – 1.60 for a period of time. Therefore the more favourable recent moves which we have seen could be viewed as an anomaly never to return as the economic recovery in the UK gathers pace.
All in all a strong pound and rising Eurozone concerns seems to indicate to me a deterioration in the current levels for those selling euros for GBP. If you need to make an exchange now or in the future please contact me Jonathan on email@example.com
After the big drop in GBP EUR rates last week following the Bank of England Quarterly Inflation Report it did look as if the pound was making some headway yesterday. However inflation figures this morning showed official figures has dropped from 1.9% to 1.6% whereas they had expected to come in at 1.8%. This lower than expected inflation figure means it is less likely the Bank of England will have to raise interest rates soon and reinforces their position from last week.
However Euro sellers beware as this spike in favour may not last indefinitely with a lot of European jobs and CPI data out next week, all of which is expected to be weak. This could put pressure on the ECB for their September meeting and see the Euro slip so if you are selling Euros I would be inclined to take advantage of current levels either on spot or forward contracts.
If you are new to currency exchange and want a better idea of how it all works, or even if you are an experienced hand and just want to get the best exchange rate, then feel free to email me, Colm, at firstname.lastname@example.org and I would be happy to explain how our services work.
Sterling has had a torrid couple of days against the Euro following Mark Carney’s comments at the Bank of England Quarterly Inflation. EU inflation figures yesterday weren’t particularly robust and GDP was slightly lower than forecast but the Euro was able to hold on to most of its recent gains despite this. However it was not exactly a glowing endorsement that events in Europe are turning around, so I suspect the Euro will remain very vulnerable.
With UK GDP revisions due out today it could provide a small boost for sterling as long as the figures are at least on or above expectations, but I don’t think the pound will go shooting up in the short term as it is unlikely to affect the markets view on UK interest rates given Carney’s recent comments. Next week we do have UK inflation and the Bank of England Minutes, but again I do not expect either to have a significant effect on the pound unless the minutes show one of the MPC voted for a rate hike this month (again unlikely following the inflation report and that all 9 voted to hold for the last few months).
To my mind this is currently a great selling opportunity for anyone holding euro and wanting to change euro to sterling for example from the proceeds of a property sale in France or Spain. The UK economy will still likely be on track and at some point UK interest rates will go up, it is just a question of timing, and when they do the pound will rise again. In contrast the Euro still has a lot of problems ahead and I cannot see interest rates there going up for years- and there is always the risk that they may change policy and potentially weaken the Euro eg through some form of Quantitative Easing program similar to the UK and the US.
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The EUR has strengthened against GBP this morning, pushing GBP/EUR rates back to 1.25 on the exchange, despite opening the day above 1.26. This positive move for the EUR against the Pound has come about despite weaker than expected Eurozone Industrial Production figures, which indicates this move has been initiated by a lack of investor confidence in the Pound.
Weaker than expected UK employment data, coupled with Bank of England (BoE) governor Mark Carney’s speech, has drained investor confidence in the Pound, which has helped the EUR move away from the recent two year low and put pressure on 1.25. Whether this is a short-term realignment for the single currency, or the start of a longer-term positive trend, is likely to be dependent on the key economic data releases over the remainder of the trading week.
Tomorrow we have a host of key Eurozone data, including inflation figures and Gross Domestic Product (GDP) figures. GDP figures are always seen as key releases by investors, as they give an indication into the relative health of that country’s economy and its growth prospects. With figures expected to come in worse than previous we may find the EUR’s momentum is short lived but any figure above the expected 0.7% is likely to push GBP/EUR rates below 1.25 on the exchange. Friday see’s the release of the latest UK GDP figures and again this release is likely to cause additional volatility for GBP/EUR exchange rates.
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Sterling has started the week on the right track pushing market levels back close to 1.2550. This week we have a host of data from the euro zone starting with industrial production data on Wednesday (10:00) followed by the important inflation and GDP data on Thursday (10:00), this all follows the ECB monthly report at 09:00. The euro zone is still having issues with deflation and it will again bring into focus Thursdays data. Figures are forecast to fall from 0.5% to 0.4% and if as expected I would look for the Euro to fall and would expect to see GBP/EUR back above 1.26 and EUR/USD into the low 1.33s by the weekend.
Should you have Euros to sell I would be tempted to avoid Thursdays release, likewise should you be buying then it might be worth holding on until Thursday. Although a word of warning for those with an interest in GBP/EUR as the Bank of England quarterly inflation report is released at 10:30 on Wednesday.
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The Euro has hit over a one month high vs Sterling as the UK trade deficit showed a widening on Friday.
If you have been reading some of my previous articles I have suggested that it is only a matter of time before GBPEUR rates begin to fall. One of the main reasons is that with Sterling so high it negatively impacts upon British exports and that takes a bit of time to filter through to data releases.
On Wednesday we have the release of UK unemployment data which last month hit its best level in 8 years. The previous month saw a fall to 6.5% and I think with UK manufacturing figures falling last Friday and the trade deficit showing problems I think we could actually see an increase in unemployment this week causing Sterling to fall against the Euro.
Tuesday morning sees the release of the ZEW survey which is a business survey concentrating on economic sentiment. It is difficult to predict how this might come out as the sanctions with Russia are likely to have some sort of impact and we could see the Euro encounter a volatile period against the Pound shortly after the release.
Thursday is likely to be the biggest day of the week as the ECB Monthly Report is published as well as Eurozone GDP data.
GDP last quarter was just 0.1% so anything higher could see the Euro strengthen and anything lower could see huge falls for the single currency.
If you are concerned about any of the week’s data announcements and would like to save money when buying currency then contact me directly for a free quote Tom Holian firstname.lastname@example.org