In yesterdays trading EUR USD interbank exchange rates rose to their highest level since May 2018 as the Dollar had yet another fragile day on the currency markets. Will the euro rate forecast continue to improve as the week goes on?
Despite some fairly positive figures on Covid-19 in the States yesterday and a rise in the stock market in the States, the Dollar is still appearing to struggle and seems to be out of favour with investors at present.
It is thought that there may be much larger troubles around the corner for the U.S and a severe economic hangover on the way. On top of this, the U.S also has political uncertainty due to the pending election on Tuesday 3rd November, merely 2 ½ months away.
With it being unknown who may be running the country throughout the course of this economic hangover it is clear that investors are keeping the Dollar at arm’s length until there is a clearer path ahead, uncertainty can be really damaging for a currency either political or economic, so with both of these hanging over the head of the Dollar it is no surprise to see Euro making gains at present, and a move above 1.20 for the EUR USD interbank rate cannot be ruled out.
Brexit Talks Start Again
Yesterday we had Brexit talks rekindled for the 7th round since the U.K voted to leave the EU at the referendum on 23rd June 2016.
The final date for leaving is 31st December 2020, so we are currently only three and a half months away and still there is no clear path for what the actual plan is.
As I mentioned with the Dollar above, this uncertainty has no doubt weighed heavily on the pound for the past few years now, so until something is in place or there is news that the two sides appear to have found a middle ground and a compromise, it does feel like the Euro may remain in a solid position against sterling.
With talks now going on again, any news of positive progress from the latest round may actually lead to a surge in value for the pound and make pounds more expensive to buy with Euros, so if you are currently holding on to a big chunk of Euros for your business or from a property sale then it may be prudent to start to consider this possibility.
The two sides really do need to get something in place by October, the fact is this cannot be turned off like a tap, there will be lots of work to do in preparation for the end of the year and it is likely that in all honesty the preparation, negotiation and tweaks to how this operates will likely go on for years to come, but a bare bones deal does really need to be in place sooner rather than later.
Of course there is the chance that the talks break down, looking back historically any mentioned of a heightened chance of a no deal Brexit has led to sterling weakness and made the pound cheaper to buy with Euro, however the majority at this stage feel that letting this happen is still unlikely, but never say never!
The rest of the trading week mainly focuses on Purchasing Manager’s Index (PMI) data on Friday for EUR, USD and GBP. This is an important release of data and will show how the manufacturing sectors in each area are performing, which can be key to economic performance.
Should either of the three areas shine or have a bad day at the office then this may lead to a volatile end to the week for the pairings and may present some good buying or selling opportunities.
If you are holding Euro or need to buy Euro in the coming weeks and months and you would like to discuss the various options available to you, then feel free to contact us today and we will be happy to help you track exchange rates alongside giving you all the information you need to make an informed decision of when to exchange.
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