Euro strength send rates lower

7 June, 2019

Grace Rae

Markets remained flat for the most part yesterday up until the European Central Banks President Mario Draghi spoke at the latest monetary policy press conference where he worked his magic to provide extra support for the euro as he announced the ECB’s latest position on interest rates which has remained unchanged at 0%. The bank also adjusts its forward guidance, saying rates are expected to remain at present levels through the first half of 2020 instead of through to end-2019. The bank also lowered its growth forecast for 2020 from 1.6% to 1.4%. The news provided some further support to the Euro which in turn put more pressure in the GBP-EUR pairing.

Over the last month Sterling has fallen by 4 cents against the Euro making a €100,000 purchase just over £3000 more expensive, and with the Tory leadership battle closing in, investors will be watching with a keen eye to see how things play out. Latest betting odds are still favouring Boris Johnson to take Theresa Mays place at Number 10 followed by Michael Gove and Jeremy Hunt. With a way to go, the path ahead is still unclear and those with an upcoming transfer may want to look at securing it sooner rather than later. With plenty of uncertainty ahead are you willing to gamble to gain an inch but losing a mile by waiting?

With little out this morning in the way of eco data, markets are likely to remain stable, and this afternoon the US post-Average Hourly Earnings, Nonfarm Payrolls and Unemployment rate, while Canada post Unemployment Rate (which is set to remain unchanged) and Net Change in Employment all at 13:30. Non-Farm payrolls are the one to watch as May’s figure are expected to drop from 263K to 185K which is not a great result as this would confirm the number of new jobs created outside of agricultural business is falling. This result could already be priced into current rates but worth keeping an eye on.

As ever in what continues to be an downward trending market, stay in touch with your contact here at CI to be kept up to date on rate movements and be sure to ask us about our Forward contracts and Limit/Stop Loss orders which could help you secure your currency needs and reduce the headache of navigating an uncertain market.