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GBP/EUR rise as Sterling dodges bullet on inflation hearings (Joshua Privett)
Most market analysts, myself included, were expecting significant weakness for GBP/EUR exchange rates with inflation hearings set to be held for the UK economy today.
Last Thursday the Pound took a serious hit when it was announced by the Bank of England that there was no possibility of a rate hike in the UK for the entirety of 2016. This caused a 3 cent slide on GBP/EUR, and the main reason given for this sudden freeze on UK interest rates was expectations of prolonged problems with inflation.
Currently inflation levels are at their worst levels since records began, so the hearings today organised by the Government’s treasury committee, will be seeking to understand why this will not be resolved in the short term and why this necessitated a rate freeze.
The difficult answers which BoE members didn’t have to give to the press on Thursday during the announcement of the rate freeze itself are now unavoidable in front of a committee who will be demanding firm reasons for why the UK is in this situation and will certainly expect solutions.
The details could only really confirm or exaggerate market fears. As such further Sterling weakness will likely result in continued falls for GBP/EUR rates.
Luckily, for Euro buyers, at midday it was announced these hearings would be delayed until Tuesday the following week.
Whether this was to spread out the impact from the rate freeze on Sterling’s value, or to give Cameron total news coverage when announced there would be no second EU referendum following the upcoming vote, this impact on the currency markets was to release some of the pressure on the Pound. This is why GBP/EUR has risen above 1.41 today.
It’s rare that near guarantees of currency weakness are afforded to the currency markets, but again it’s also rare that major economic announcements get delays. As such this window for Euro buyers until Tuesday is a gift that should be seized.
Should a similar fall of three cents occur as the gritty details of the current UK inflation situation gets fleshed out and laid bare for markets to see next week, it will be extremely difficult for market rates to recover quickly for those looking to buy Euros with Sterling.
I strongly recommend that anyone looking to purchase Euros in the coming months should contact me on [email protected] to discuss a strategy for your transfer in order to maximise your return whilst rates are near these multi-year highs. There should be opportunities this week for the current rise on GBP/EUR to be extended and I can explain how to buy at the high of any spikes which appear.
These current rates of exchange can be pegged if you do not require Euros until later in 2016, and I have never had a problem beating the GBP/EUR rates of exchanged offered elsewhere during my career.
Source: http://www.eurorateforecast.com/2015/11/10/gbpeur-rise-as-sterling-dodges-bullet-on-inflation-hearings-joshua-privett/
