Dust settles post Scottish vote, Euro weakens following Draghi’s speech

23 September, 2014

Matthew Boyle

It has been a relatively quiet few days following last week’s major announcement that the vote for Scottish Independence was a “no”.

Many expected a surge in GBP rates following this, however once the market and investors realised that the music had stopped, the party was over and in essence we were the same UK as we were last week and indeed last month rates began to slowly tail off.

Interestingly though yesterday we saw an improvement in both GBP>EUR and also USD>EUR rates as following Mario Draghi’s announcement to the ECB suggested that there may be further room for stimulus with the under-performing Euro, leaving the door open and saying he is ready to “use additional tools if necessary”. As such this was seen as Euro weakness and allowed the pound to gain around 0.5 cents (although some of this gain was eroded by the close of trading) and the USD gain a similar amount, although again some erosion in the gain was seen by the end of the day. Rate against USD for the pound have improved slightly since the vote – by around a cent, although compared with the Euro the USD is at present a lot stronger, which would explain in part why gains are a bigger ask at present against the single currency.

Today is a quiet day in the market as we have little data of note released – a range of Euro manufacturing and PMI data in the morning, with the same from the US in the afternoon, also coupled with redbook data release. All in all though it is set to be a relatively quiet day in the way of market swings with the majors likely to stay range bound throughout the days trading.

A word to the wise for any of you with upcoming Euro requirements… we are close to a 2 year high on GBP>EUR and this is largely in part to last week’s vote and uncertainty in the Eurozone as highlighted by gains following Draghi’s speech. This may be short lived as much of the commotion following the vote is dying down and given there are hints at a change to the ECB monetary policy looming. Consequently any of you with upcoming Euro requirements may like to consider booing a forward contract to secure your rate and avoid any disappointment should the rate drop, as there is a risk by waiting in the short term you risk gaining an inch but may lose a mile should the rates swing.

Speak to your Currency Index broker today for some friendly and professional guidance on how to get the most out of your currency transfer – we can help you stay well informed and on top of the currency market news.