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GBP/EUR best exchange rates – 1.40 on the markets (Joshua Privett)
It is the timelines for the US and the UK to raise their interest rates which will continue to be the main determinant for GBP/EUR rates up until the end of 2015.
The printed hints made by the Federal Reserve Bank of America which alluded to a possible rate hike in the US economy in December this year was what caused the initial slide in the value of the Euro from Wednesday last week.
The value of the US Dollar is heavily influential on the value of the Euro. The USD/EUR currency pairing is the most heavily traded in the world. The general rule of thumb for exchange rates is that when the value of one changes you see the opposite effect in the other.
In this case, huge amounts of capital globally were pumped into the USD in the hope of returns on their investment in December. A significant proportion of this capital would have come from the Euro, hence the sustained weakness for the single currency last week which permitted a rise up above 1.40.
Is this trend on GBP/EUR set to continue?
Fortunately for those holding Euros this is not a new long-term trend. This change in rates reflects companies and investors reforming their positions before the start of the next month with the US interest rate decision in mind.
These exchange rates are nothing to do with changes in the performance of the UK or Eurozone economies, as such there is little data out at the start of the next month which will keep rates up at these buying levels. They can therefore be described as ‘artificial’.
As an example, on Friday some very positive Eurozone inflation data (much better than the UK is currently facing) caused rates to fall to 1.38 before the above market forces caused 1.40 to reappear.
The key data set for next week where a significant correction on GBP/EUR is expected will be the Bank of England interest rate decision and monetary policy statement. There have been continuous delays on when a hike may occur as a result of concerns over the slowdown in China and the UK enduring record low inflation. For the past three months we have seen significant Sterling weakness following the announcement. With little change on the global landscape I am expecting more of the same.
I strongly recommend that anyone with Euros to buy over the coming months should contact me on [email protected] to discuss a strategy on your transfer and receive a competitive quote to maximise your Euro return. Even if your requirements are not until 2016, these currently favourable levels can be pegged to avoid watching your budget become more expensive.
Source: http://www.eurorateforecast.com/2015/11/01/gbpeur-best-exchange-rates-1-40-on-the-markets-joshua-privett/
