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GBP/EUR exchange rate slide halted briefly on Friday afternoon (Joshua Privett)
The Euro’s value swung wildly on Friday with markets still digesting the news of an effective freeze on UK interest rates until 2017, causing GBP/EUR to collapse, whilst news of a likely rate hike in the US then caused the Euro itself to weaken by about a Cent against Sterling in the space of 10 seconds on Friday afternoon.
Regular readers of my articles will have seen this before where news in the USA affects the value of the Euro. As USD/EUR is the most heavily traded currency pairing in the world, the general rule of thumb on the currency markets is that if one strengthens, the other loses value.
In this instance, the almost unbelievable news that the US added 100,000 more jobs than expected to their economy in October caused a huge amount of capital to move out of the Euro and into the US Dollar, as many now expect a hike for US interest rates in December with such positive figures being posted.
This caused the Euro to weaken artificially from capital outflows which marginally reversed the slide GBP/EUR from 1.42 to as low as 1.38 between Thursday and Friday morning.
The reasons for the staggering fall in Sterling value is down to the Bank of England effectively announcing a delay in our own interest rate rise throughout the entirety of 2016.
It’s rare that such finality is given to long-term financial policy for any country. This accounts for Sterling’s sharp and continuous fall in value.
Worries about inflation, which are currently at the worst levels since records began, were the reason given for the expected long-term delays. As a result, public inflation hearings will be held on Tuesday by the government to get a better understanding from the BoE about the current situation.
This grilling can only really take further confidence away from Sterling, as the difficult questions BoE members avoided in the press conference last week will unavoidably have to be addressed.
As such I expect Sterling to continue to weaken on the markets in the coming months. Those with Euros to buy in particular should be looking to take advantage of the gift presented to you from the positive US news.
By all rights GBP/EUR should be as low as 1.37 without the intervention, and buyers should recall that just three weeks ago, GBP/EUR was as low as 1.33 – the worst levels to buy since February – off the back of similar news about a delayed interest rate hike.
I strongly recommend that anyone looking to buy Euros and have a requirement between now and the early months of 2016 should contact me on [email protected] to discuss how the current rates of exchange can be fixed to avoid any further negative movements affecting your budget. I will point out that I have never had an issue beating the rates of exchange offered elsewhere.
Euros sellers can do the same, and we can discuss how to ride any further movements in your favour to maximise your Sterling return within the allotted time you have to complete your exchange.
Source: http://www.eurorateforecast.com/2015/11/08/gbpeur-exchange-rate-slide-halted-briefly-on-friday-afternoon-joshua-privett/
