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GBP/EUR exchange rate still just above 1.38 (Joshua Privett)
Yesterday afternoon saw one of the largest single movements in GBP/EUR since the start of this year. This includes the particularly volatile period surrounding a potential Greek exit from the Eurozone.
Rates moved upwards of three cents for the Pound against the single currency, with a combination of positive UK economic data with sudden negative news from the Eurozone causing such a significant stretch on GBP/EUR in just a few hours yesterday.
The morning’s retail sales figures for the UK economy came in a full 1.6% better than expected – likely down to the influx of tourists for the Rugby World Cup.
The second and most important event came at the start of the afternoon, when Mario Draghi, the head of the European Central Bank hinted that the current European Quantitative Easing program may run further than the original mark of September 2016.
He also made slight hints about current account rates dropping to 0% in a bid to stimulate spending.
This news reduced long-term investment in the Euro as a result. Many investors had bought into the Euro recently due to its relative cheapness, and the promise of higher returns once Quantitative Easing were lifted at the back end of next year. This is now in doubt, and these investors moved out of the Euro, reducing its value to the immediate and isolated mass sell-off.
It must be noted that if a rate cut does occur, this will be confirmed at the end of December at the earliest because this is the next meeting of the European Central Bank.
So it seems Euro rates will largely be in limbo until confirmation of a potential rate cut at the end of 2015.
With little data out until Tuesday next week, rates will likely fall away from these two month highs due to increased demand for the cheap Euro.
As a warning, after Tuesday this fall may not be gradual when GDP data for the UK economy is released. The last two months have shown reduced forecasts for the year due to continuous contractions in the manufacturing and construction sectors – each time Sterling has weakened off the back of this news, Euro buyers should be conscious of a repeat performance.
I strongly recommend that anyone with a Euro requirement before years end should contact me on 01494 787 478 and ask the reception for Joshua to discuss a strategy for your transfer and maximise your Euro return. I can also provide a competitive quote on your transfer should you wish, I have never had a problem beating the rates offered elsewhere. These current rates can also be pegged to your budget continually changing on your transfer. [email protected]
Source: http://www.eurorateforecast.com/2015/10/23/gbpeur-exchange-rate-still-just-above-1-38-joshua-privett/
