Euro Rates Close to Best of 2017
15 February 2017
Yesterday was a very busy day in the way of data, with many releases which saw market rates move. It was the UK that dominated the early morning releases with retail, house price and producer price index data alongside the significant release of inflation. Overall it was a strong set of results from the UK, showing improvements across all eco stats. However, it was the inflation figure that was the let-down. While the rate itself is the highest, it has been since June 2014, up to 1.8% from a previous 1.6%. This was below the predicted level of 1.9%, as such, was weak for the Pound as it only delays the likelihood of an interest rate hike in the UK, something that would see a significant degree of strength for the Pound. As a result of this release the pound was weak and lost around ¾ of a cent against both the Dollar and Euro.
Losses against the Euro were however relatively short-lived, as shortly after the UKs releases we saw the German ZEW sentiment survey show a pessimistic outlook, while also Greek and Eurozone GDP also showed contractions. Consequently, losses for GBPEUR were stemmed as the market focussed on the US afternoon releases for indicators. The US posted an optimistic outlook in their NFIB business index while also showing improved figures across the board for both producer price and Redbook index. However, it was the US monetary policy statement that provided the movement in the afternoons trading.
In what was a relatively bullish speech from FED Chair Janet Yellen she highlighted that the US economy was showing resilience, and hinted that there would be further but gradual rate hikes planned for 2017. This outlook pushed strength into the USD, and while it did not move hugely against the pound after gaining ¾ of a cent in the morning (USD>GBP now close to 31-year lows) the greenback did steal half a cent against the single currency. This put pressure on GBPEUR and allowed the pound to recover taking it back close to the best rates we have seen so far this year.
Today will be another significant day as we have key releases from both the Eurozone the UK, while the US heavily dominates the afternoon releases. The day kicks off with the ECB non-monetary policy meeting at 8.00am followed by UK unemployment data at 09.30. The afternoon as always is dominated by the US who post some key releases – Retail sales, inflation and industrial production at 13.30 followed by a speech from Janet Yellen at 15.00.
With so many key releases it will certainly be an important day, and with the date for article 50 fast approaching (March 9th)concerns are starting to build as to how this will affect the market and exchange rates. GBP>EUR rates are close to the best they have been this year, having improved by nearly 3 cents in the last week. And with so much uncertainty prevalent in the market, the start of Brexit approaching and the chance the market could snap-back following the recent gains those of you holding out to buy Euros may like to consider the risk in the coming weeks.
Equally the USD while currently healthy does seem particularly volatile since Trumps takeover at the Whitehouse. With the US constantly in the news and seemingly global relationships being tested at every corner by President Trump the USD is also under pressure.
Should you have, any future requirements speak to your Currency Index broker today for some helpful guidance on how you might best reduce your cost and lessen the risk of your transfer, in what is such a volatile period. Currency Index can help you stay well informed and well ahead of the market.