Euro rallies on Greek deal

13 August, 2015

Rob Bastin

After some months of uncertainty, the Euro is finally being supported by the likelihood of a new bailout deal being agreed in the coming week, great news for those who have Euros to sell as some much improved opportunities are likely to present themselves this month, however not so good news for the Euro buyers who didn’t act on the recent year highs. Since the announcements from the Bank of England last week, GBP/EUR has dropped 4 cents in as many days, once again failing the 1.40 level for the 6thth time this year. The markets are currently adjusting expectations of rate changes in the UK and US, both of which are now expected later than had originally been priced, meaning that it is the Euro that will be the currency that benefits in the short term. EUR/USD could see the biggest gains in the coming weeks, with GBP/EUR extremely fragile to losses that will likely test the lows of recent months. Buyers should now expect things to get worse before they get better again and so anyone with needs in the coming months should give serious consideration to protecting themselves from a potential drop in the coming weeks.

Sterling’s weakness was aided yesterday morning following poor unemployment data that again showed an increase in unemployment, with a rise of 25,000 on the previous quarter. Average earnings also missed expectations dropping from 3.2% to 2.4%, with the headline rate remaining unchanged at 5.6%.  In other data, the Euro shrugged off weak Industrial Production figures that were 0.4% down on last month.

unemployment exchange rates

Today sees an ECB Monetary Policy Meeting at 12:30pm, with the main focus of the day on the US at 1:30pm with their latest Retail Sales figures. Results are expected to have improved to a 0.5% growth in July, up from a 0.3% contraction in June. With the dollar on the back foot currently, any shortfall on these figures is likely to see further depreciation for the greenback for anyone sending money to the USA.