It could be a particularly busy end to the week for euro exchange rates, with a long list of economic data combined with the ongoing political sagas holding the potential to drive EUR levels even further away from the close ranges it has tended to stick to against it’s major counterparts since the summer.
Euro to pound exchange rates have struggled to build back above the 0.90 mark having slipped as low as 0.88 on interbank exchange rates in the early stages of the week, whilst EURUSD also dropped below the 1.18 mark despite the greenback readjusting after the elections. Clearly the single currency might have fallen out of favor with the markets, leading to plenty of question marks as to when might be the best time to purchase foreign currency with euros.
Yesterday’s speeches from the European Central Bank’s (ECB) figure heads Lagarde, De Guinos and Lane might not have provided as much support as euro holders might have hoped for. Indeed, since the start of the month, the ECB has been put under added pressure from member blocs, asking for more support, financial stimulus and further pay breaks to ensure lending conditions remain viable and see the bloc through another phase of regional lockdowns.
It is worth remembering that earlier this month, European banks were pushed to brace themselves to cover their growing list of bad loans whilst the pandemic hits the zone’s economy once again. Spanish officials asked for guarantees that the ECB will be looking at adding further funding as reported in response to continued indicators of sustained deflation due to hit certain leading nations. Dutch representative Knot this week also called for the eurozone’s support fund to be stepped up. Even ECB chief supervisor Andrea Enria recently highlighted the potential of a “huge wave” of dangerously positioned loans creeping up on the blocs leading lenders, with a projected value of up to 1.4 trillion euros.
Clearly the markets have been taking note with EURGBP rates falling to multi month lows since the start of the week. It will be interesting to see if tomorrow’s and Friday’s data further compounds the pressure on the ECB to act and in turn provide further reason for investors to pull away from the euro.
Inflation figures, headline employment data and Key Gross Domestic Product (GDP) release: When might be the best time to buy pounds with euros this week?
Inflation figures from Germany and industrial figures from across the bloc are all due tomorrow and could be holding more weight as a result of the growing fear of deflationary pressures. Should prices continue to fall in tomorrow’s release from the Eurozone heavy weight might we see euro exchange rates against the pound fall past that 0.87 mark? Consumer price index numbers from France and Spain due on Friday followed by pivotal GDP figures for the bloc and employment data.
Interestingly the German government’s independent analysts yesterday reported they expected to see a contraction of 5.1% in the economy this year taking into account the further measures being taken to contain the virus so it will be interesting to see how tomorrows figures stack up, particularly given the difficulties seen in some of Europe’s other larger nations like Spain, Italy and Portugal. Those looking to purchase pounds with euros in the immediate future might want to plan around this release. It may pay to reach out to your account manager and set target levels using a combination of a limit order and a stop loss. Having a viable game plan during volatile periods can be the difference when trying to maximise your returns.
Business confidence in Europe to fall with added restrictions over festive period expected: Will the euro fall further?
De Guinos and Lane, key figures from the European Central Bank, have continued to point towards the close relation between capital within the market, employment levels and their effect on consumer spending. A growing concern is the lack of activity within the European economy. Despite this, health figureheads in France are pushing for tight restrictions over the festive period to control the spread of the virus. The head of one of Paris’ top hospitals even called for All family reunions and parties to be banned. This hasn’t been received kindly by businesses within the hexagone for obvious reasons, and clarification on the country’s stance here might also dictate business confidence as the year comes to an end. This trend could well be something to monitor if you do have a currency requirement involving the euro.
You can get in touch to discuss the outlook for the euro, and the contract options mentioned above to manage your upcoming currency exchange. I’ll be happy to respond and discuss your enquiry.