Euro Under Pressure After ECB Comments

The Euro came under pressure in trading today after the ECB acknowledged that inflation in Europe was likely to remain low for some time, and if it were to drop any more could trigger them to take some unconventional action.  The issue for the ECB is that the longer inflation remains low, the harder it is to reverse to normal “healthy” levels and would run the risk of deflation.  Interest rates in Europe are already very low, so it may result in some form of bond buying program similar to the Quantitative Easing undertaken by the US and the UK.  However this weakened the respective currencies by flooding markets with increased liquidity.  On the other hand, they may implement a policy which hasn’t been seen previously, and this has created a degree of uncertainty, in turn resulting in the Euro slipping as confidence wobbles.

We have US non-farm payroll data out tomorrow afternoon, so if you have a EUR USD requirement this will be very important- it looks as though the Dollar is gradually regaining some of the ground it has lost against the single currency of late.  If the jobs data increases global confidence, then we could see sterling rise a fraction higher against the Euro too as I think sterling has been undervalued against the Euro last week.  If you need to exchange Euro into pounds, or any other currency exchange for that matter, feel free to email Colm at cmg@currencies.co.uk for an overview of our services and how to get the best exchange rate.