Tag Archives: Moody’s

What next for the Euro?

February 14, 2012   Euro Strength, euro weakness

As with most weeks there is a host of data anyone with a vested interest in the Euro, whether buying or selling, should keep a close eye on. Most will now be aware that a deal appears to have been finalised in Greece to allow the next tranche of bailout funds to be made available to prevent Greece from defaulting – this has led to some short term support for the Euro posting gains of just over 1% against the USD and GBP in the process. This week may also be key in determining the short term movements for the Euro. As my colleague mentioned below we have the Bank of England inflation report tomorrow, this will outline the potential for further Monetary easing form the UK’s and could go someway to determine investors appetite for risk. Of the pairing EUR/GBP the pound still appears to be benefiting from a degree of investor confidence when compared to the Euro (although the fact Moody’s the rating agency has moved the UK to negative from stable in terms of its AAA credit rating, the confidence in the GBP may fall a touch). Another key day will be Thursday as this time it is the turn of the European Central Bank to release their monthly report, this too should in theory confirm and conclude the second bailout for Greece and if so I would expect Euro strength against both the US dollar and pound following this release.

As with any data release no one can ever be certain of the outcome and the effect this will have on the market, the one thing I can be certain of is the continued volatility on the currency markets is likely to continue. I would expect EUR/GBP to remain around the 1.19 mark in the short term but with continued pressure on the UK economy (rising unemployment, reduced growth, the potential for more QE) I would expect to see a move below 1.19 in the next few weeks. as far as EUR/USD is concerned I too believe the Euro will strengthen as investor confidence increases and a move away from the ‘safe haven’ of the dollar is seen. I would expect a move towards 1.35.

Should you have an upcoming transfer and wish to discuss my views and the contracts we can offer then please email me at mgv@currencies.co.uk

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Euro Currency Exchange Rate Forecast

June 15, 2010   Euro Strength

    The Euro has had a very turbulent time of late against the US dollar and GBP Sterling. Last week the Euro hit a 4 year low against the US dollar and there was even talk of the currency pair hitting parity. Despite this the Euro has rebounded this week both against both the US dollar and Sterling. This is because the major fears of debt default are cooling.

Greek government bonds have been downgraded four notches to “junk” status by Moody’s credit rating agency. Normally such an event would move the market. But such sentiments have long been factored into the markets and as such had very little effect. There is a growing sentiment that the Euro is trading at an acceptable level. There have been lots of financial mechanisms applied to reduce the debt risk presented, namely by Greece to both the Eurozone and the Global Economy. There was also some positive manufacturing data from the Eurozone hinting at a slightly stronger recovery.

The Eurozone represents the world’s second largest economy. I don’t think the economic strength this represents will be allowed to be jeopardised by Greece. An economy that represents only 2.6% of Eurozone GDP.  Yes, there are other countries involved that created the debt, contagion and fear – Portugal, Spain, Italy to name three. But like Greece, these countries have all implemented tough austerity measures and let’s not forget that both the US and the UK have and are having to implement their own tough measures to fight the severe budget deficit problems they face.

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