This morning we have seen GBP/EUR rates plummet, with the currency pair falling by 2.5 cents from €1.3950 this morning, to €1.37 at the time of writing:
What has caused the drop?
The reason for the drop was a strengthening Euro. Earlier today we saw the latest EU inflation numbers, and these showed that inflation in the Eurozone turned positive in May after five months of negativity, and this revives hopes of an economic recovery in Europe. Earlier this year, the European Central bank embarked on a huge €1.1 trillion Quantitative Easing, or money printing programme in an attempt to stimulate the Eurozone economy, and the figures today suggest that this is working. That is why the Euro gained strength and has become more expensive to buy.
Meanwhile in Greece…
Also today there may have been developments in Greece. Their Prime Minister Alexis Tsipras has said that he has issued "a realistic proposal" to its international creditors in an attempt to secure a deal over its debts. "We have submitted a realistic plan for Greece to exit the crisis," he said. The problem is, we don’t know what this plan actually entails! International Monetary Fund chief Christine Lagarde and ECB president Mario Draghi are at a meeting between German Chancellor Angela Merkel and France's Francois Hollande discussing the issue at the moment, and their attendance shows how serious these talks are.
If they really have made a plan that might be accepted, expect the Euro to gain further strength in the coming days pushing rates even lower. If however his plans come to nothing, then the uncertainty about what will happen with Greece will remain, and this could weaken the Euro and cause rates to recover
Worried about Pound/Euro exchange rates?
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