The Euro has begun to creak in the last couple of days against recent highs on the pound and the Dollar. The Aussie has also smashed the single currency so what is causing this movement?
Well the Euro had strengthened significantly on the back of slightly better than expected inflation data last month and the ECB’s announcement not to change policy and actually increase growth forecasts. However I felt these levels were unsustainable and it looks as though comments from the ECB members that negative interest rates are still a possibility. We have inflation data for Germany on Friday and wider EU figures on Monday, and whilst UK figures were low but as expected this week, I think European figures could struggle.
If inflation is low then this could trigger another wave of Euro weakness and I suspect markets are already beginning to price this possibility in. The ECB have said that prolonged low inflation would be difficult to combat, so any GBP EUR currency transfers may want to keep a close eye on Friday and Monday as rates creep back towards 1.20. I don’t foresee huge sterling weakness given recent UK data so Euro sellers may want to move quickly to avoid potential losses.
The US Dollar has made headway against the Euro following the recent Fed Minutes and I still feel long-term that the Dollar will strengthen back- interest rates in the US will likely start going up next year at some point whereas the Eurozone will still be in a mire.
The Aussie has torn the Euro to pieces of late and surpassed even my expectations – the RBA have been pretty clear that the current cycle of interest rate cuts and whilst I expect the run of strength will rebound as speculators take profit, there may be a little bit more room in this run yet after Stevens speech in the early hours of this morning. If you do have a currency transfer requirement and would like help getting the best rate then please feel free to call Colm on 01494 787 478 or email me at email@example.com