Without Much Euro Data Out This Week Will The Euro Fall Further At Next Week’s ECB Decision (Colm Gilhooly)

There are a few more data releases out in the next few days, including German IFO data out this morning, however most of the big releases are actually US based such as Durable Goods on Thursday and GDP on Friday.  With that in mind it looks as though next week could be a big one for the Euro.  With German unemployment, EU CPI, GDP, and Manufacturing PMI, as well as the ECB rate decision, a lot could happen to the single currency.

If inflation disappoints and other data is weak, it could well be the trigger for the ECB to signal further intervention is on the cards in which case we could see the Euro plumbing new depths against the pound and the Dollar this year.  In my view the Euro is likely to slide further in the long run purely based on interest rate expectations- the ECB are expected to keep things at least on hold at 0.05% for a couple of years at least, whilst many analysts feel both the Fed and the Bank of England will raise things next year.  Whilst the UK base rate of 0.5% is not exactly an amazing return currently, that gradual increase in the difference between the two economies is likely to see the pound gain value over the Euro in time as investors get a better return on their funds.

To this end I would suggest anyone looking to sell euros should take advantage of any short term spikes rather than risking a bigger drop over time.  If you need to make a currency transfer and want to get the best exchange rate, then feel free to contact Colm at cmg@currencies.co.uk and I would be happy to explain how our service works to save money on currency exchange.