Good morning and welcome to a new trading week. After a very volatile couple of weeks that has seen GBP/EUR hit 7 year highs of €1.35, things have stabilised somewhat, and this morning the rate has dropped back into the €1.32’s. With no significant data of note today, the only thing I can attribute the drop to, is a rumour that the Swiss National Bank will be unofficially targeting a EUR/CHF rate of 1.05.
Why has the Pound/Euro rate fallen?
This is significant as they recently ended their policy of keeping the rate at 1.20. They did this by selling CHF and buying Euros to keep the desired rate. These rumours mean the SNB could be buying huge volumes of Euros to keep the rate where they want it, and this demand for Euros has strengthened the single currency and made it more expensive, hence why this could be the reason GBP/EUR rates have fallen a cent this morning.
Will the Pound/Euro rate go higher or lower in February?
All in all, with rates to buy Euro still above 1.30 which is close to a 7 year peak, it’s a good time to take stock of any Euro requirements you may have in the coming months. With all the bad news from Europe now priced into the rate, I think we’ll struggle to see it get much higher. Furthermore if the QE measures recently announced by the ECB have the desired effect, we could see the Euro gain further strength and pull GBP/EUR rates lower.
It’s also worth mentioning Greece – it looks like they won’t default on their debts, and for the time being will be firmly remaining in the Euro, so the initial uncertainty after their election has now subsided, and that’s also why GBP/EUR has stopped climbing.
Do you want the best possible exchange rates?
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What could affect exchange rates this week?
Below I have outlined what I think will move exchange rates this week. To discuss how this could affect your currency requirement in more detail, click here to send me a free enquiry.
Tuesday 3rd February 2015 – The only UK data of note is PMI construction, which looks at the construction sector. It’s a relatively minor release but could affect Sterling. GBP/AUD could face a volatile day however with an Australian Interest Rate decision and following statement. GBP/EUR has recently seen very good gains with trading levels above $1.90. Staying with the antipodean currencies, the NZD could also be affected by Unemployment figures and a central bank speech today.
Wednesday 4th February 2015 – Again only 1 release from the UK today; services PMI. As an indicator of the economic situation in the UK it can often affect Sterling. Sterling/Euro could also be affect today however by EU Retail Sales, and a policy meeting from the European Central Bank. Across the Pond we have a host of data from the States, including Employment, Manufacturing and Services figures.
Thursday 5th February 2015 – today we have the Bank of England interest rate decision. I think this will be a non-event; rates won’t change from 0.5% in my view for another year. Elsewhere today we have an economic bulletin from the ECB, Retail Sales from Australia and Jobless claims along with Trade Balance figures from the USA.
Friday 6th February 2015 – Today the UK releases its Trade Balance figures, which show the difference between imports and exports, and this release often creates some volatility for the Pound. There aren’t any releases from Europe today, but in the afternoon we have Jobs data from the USA. The Non-Farm payrolls in particular can really move the GBP/USD rate. The forecast is for 235,000 new US jobs to have been created, but the actual figure is often very different which could move the Pound/Dollar rate around 1.30pm.
To discuss how the above could affect your currency requirement in more detail, or to obtain a quotation on the rates I can offer, click here to send me a free enquiry.