There are multiple key factors impacting the euro forecast at present, with COVID-19 still showing signs of coming back for a second wave, ongoing Brexit talks and some really worrying economic data – not just in the Eurozone but around the globe.
Foreign exchange can be unpredictable and volatile at the best of times so with the three aforementioned factors all adding extra uncertainty this is a market where you almost have to take each day as it comes.
If you are in the middle of a large currency transaction or should you have an exchange coming up in the months ahead then one thing is for sure, there will be plenty of volatility, creating some great opportunities if you catch the market at the right time.
The week has not been a great one for Euro against Sterling, with the latter gaining almost 1.5% over the trading week and seemingly on good form against all major currencies.
Sterling has had a good week for two reasons, first and foremost albeit very small, it does seem like the expectations on positive Brexit talks does appear to be rising, a no deal Brexit has seemed to be holding back the value of the pound for a long time now, and so even the slightest sniff of a positive round of negotiations and this seems to greatly benefit the value of the pound.
It does seem like the latest round of the negotiations is going fairly well and there has been talk of a potential landing zone between the U.K and EU and possible compromise, so this is a subject to watch very closely.
Michel Barnier has hinted that he is willing to look at compromising if the U.K is also willing to meet in the middle so any further progress may make the pound more expensive to buy.
With this pairing being the most traded pairing in the world and with both currencies seemingly battling it out for a safer haven status at present, it is no surprise to see that there has been quite a bit of volatility between the two.
The interbank exchange rate is currently sat at 1.1260 following a rise to 1.1350 earlier in the week.
Covid-19 concerns are key at present, the sheer size of the problem in the U.S and the issues that are expected to follow with the U.S economy has suggested many analysts to expect USD exchange rates to weaken quite considerably in the coming months, however the challenge still remains that in times of global uncertainty we are still seeing investors flocking to the Dollar.
The Dollar has historically been a safer haven and when we had the first phase of Coronavirus really start to take a grip on the world Dollar exchange rates made strong gains against all major currencies, so there is the potential that a second wave may have the same effect.
Data has been thin on the ground this week and there is very little to change that pattern to round off the trading week today, with no further economic data releases due from the U.K or Eurozone, we do have some data out from the U.S this afternoon but nothing that is expected to lead to sharp movements unless there are any large surprises that come from it.
Covid-19 cases and Brexit news may be the catalysts for market volatility today and with this being fairly unpredictable it may be prudent to keep a close eye on the markets if you have a pending trade to carry out.
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