ECB Meeting Today

2 May, 2013

Matthew Boyle

Today could be a volatile day particularly for the Euro as later today the ECB meet, with many analysts predicting they will announce a cut in interest rates to 0.5% from 0.75% – a record low. Although the true impact on the Eurozone economy a cut will have, markets are likely to react positively and we could see rates on the Euro weaken, so if you are buying this may be an opportune time. A move which will try to stimulate growth amidst ongoing fears may be welcomed, as Tuesday it was announced that Eurozone unemployment is at an all time high, whilst inflation is at a three year low.

Yesterday the pound rose close to an 11 week high against the USD prior to a report that showed construction shrank at a slower pace in Aril. Certainly the pound has started to regain ground against the dollar gaining 2.5% this month. However this should be taken in context as it is still 2.8% down for the year and its battle with the Euro continues.

Despite showing some recovery recently, mainly off the back of the positive GDP figure last week, the pound is struggling to break through certain levels. This is largely due to ongoing fear that further Q.E will be required in the UK. Many feel that if it is not announced when the BoE meet in May then when Mark Carney starts on July 1st this will be inevitable. We may also see a huge swing in the BoE policy with further sterling devaluation in an attempt to boost exports with many feeling the pound is currently overpriced.

If you have any currency transfers coming up, particularly those that involve Pounds or Euros make sure you speak to your Currency Index broker as soon as possible – stay well informed and well ahead of the markets.