Euro weakens by over 1 percent

5 September, 2014

James Moroney

It was a hectic day on the foreign exchange markets yesterday as key data releases shocked everyone. Yesterday saw the European Central Bank drop interest rates from 0.15% to 0.05% causing the Euro to weaken by over 1%. This brought the rate for buying Euros jump up to within half a cent off the best it has been all year. Today we see the release of European GDP, which could cause further problems for the Euro .

Bear in mind that in two weeks the Scottish independence vote is due – depending on the outcome there could be massive consequences for the Pound. The markets view a United Kingdom as a much more viable economic power than a split group of countries and the uncertainty of a Yes result and the knock on consequences for the Union of having to pull itself apart would cause massive uncertainty and therefore likely weakness for the Pound.

The dollar was boosted by the ISM Non-Manufacturing PMI release yesterday which was predicted to drop from 58.7 to 57.5 but actually grew to 59.6% gaining 0.9% from July. The US Dollar has been gaining significant strength recently as a result of the weakness in the other majors and the rate for buying Dollars is now about 8 cents down on where it was only a matter of weeks ago. Today’s Non-Farm Payrolls will give further indications of the US economy’s position and could cause even more Dollar strength.

So if you are looking to exchange Pounds into Euros the rates are looking good at present, but there is a definite risk of it falling away as the Scottish vote nears, and if you are looking to buy Dollars you probably need to be looking to buy them sooner rather than later. Either way make sure you stay in close contact with your CI account manager to be kept informed of exactly what is happening and the impact it has on your specific requirement.