The Euro continues to maintain the higher ground against both the pound and the US dollar as the Eurozone economy continues to show signs of improvement. The issues of Brexit and Trump are seeing particularly sizeable movements for GBP EUR and USD EUR. The Euro has even gained by 12 cents against the US dollar in the last three months highlighting how global concerns are helping support the Euro.
The pound crashed against the Euro by almost 1% yesterday following the Bank of England meeting where interest rates were held constant at 0.25% as widely expected. The reason why GBP EUR fell is because there were only two members from this meeting who voted for an interest rate hike. At the last meeting there were three members of the Monetary Policy Committee who voted to hike so the likelihood of seeing a rate hike any time soon is diminishing. This is major news and the markets are already adjusting for this change At this rate the European Central Bank could be hiking interest rates before the UK does which would be negative for the pound.
There is currently an excellent opportunity to convert Euros for pounds with rates sitting at 1.1075 this morning. Although the outlook from the Bank of England is now weaker than many had expected there is likely to be further volatility for GBP EUR exchange rates. The pound may drop a little bit further but September is likely to see additional volatility for the pair. After the parliamentary summer recess the Brexit negotiations will change a gear and developments here could see major market movement.
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