Euro GDP sends exchange rate lower

The Euro gained value on Friday after better-than-expected GDP figures for the single currency zone, sending rates for money transfers to Italy, France and Spain to their lowest for a month.

GDP for the third quarter came in at 0.2%, hardly a spectacular figure, but with Eurozone inflation also coming in on expectation, fears of deflation and recession were at least avoided. Italy however is technically back in recession.

Markets took the opportunity to buy Euros, driving the price higher and leaving the Pound looking fragile.

The same was true for the Pound against the Dollar, with US retail sales and consumer sentiment both better than expected, to leave sterling on the back foot at the end of the week.

Pound back in focus this week

This week sees a return to more important data in the UK. We have inflation (Tuesday), the Bank of England minutes (Wednesday), retail sales (Thursday) and public sector borrowing (Friday). The Bank of England minutes will show whether the 2 members who have been voting for an interest rate rise in recent months, have changed their mind and joined the other 7 in wanting to keep interest rates on hold. If so we could see the Pound fall further as this would be confirmation that potential interest rate rises, which have been keeping sterling higher recently, are now further away than previously thought.

Elsewhere with European Central Bank President, Mario Draghi, speaking this afternoon, and US & Canadian inflation figures out later in the week, we could see some volatility across all exchange rates. Make sure you aren’t caught out by adverse movement by talking to your Currency Index dealer in advance of your transaction.