Strong Euro stops GBP EUR surge

26 April, 2017

Grace Rae

In recent weeks we have seen a lot of movement in rates. Last week we saw the Pound advance 2 cents against the Euro when the Prime Minister announced a snap general election due in June and gave Euro buyers one of the best buying opportunities since the Brexit vote. However, these gains were short lived and over the weekend Euro strengthened diminishing the 2 cent gains we saw last week following the first round of the French Presidential elections where Emmanuel Macron came out on top and faces Marien Le Pen in the final round of voting in May.

Macron is currently favoured to win the election holding a 20% lead against Le Pen and should a Macron victory happen there is every chance that we will see the Euro strengthen further. This is because he has been measured as less threatening to French politics, unlike his opponent Le Pen who has been quite vocal in her views to host their own referendum to exit the EU. However, as past events have proven with the UK referendum and US Presidential election opinion polls are not also guaranteed to be correct. Le Pen has also temporarily stepped down as leader of her National Party in what could be an attempt to win over voters, and should we see a Le Pen Victory we could see Euro weaken at the risk of a France referendum following her Presidency.

Recent reports have also been suggesting that European Central Bank may consider taking a faster approach to monetary-policy normalization following the French election. The latest surveys from Bloomberg have suggested that economist have also reduced their expectations on how long it will take the ECB to taper their Quantitative Easing program and bring forward a rate hike. This is again a Euro positive move and not the best news for Euro buyers.

We then have the UK General election in June and depending on the outcome of campaigning and opinion polls we could see the Pound strengthen but as the Euro is also strengthening it is unlikely that we will see the rates move back up to the levels we saw last week. Therefore it is more likely that the Euro will be the winner in the coming months so may be wise to consider booking your requirements sooner rather than later. One option we provide is our Forward contracts which allow you to secure your currency by fixing a rate ahead of needing the currency with just a 10% deposit. Eliminating any further potential losses.

Today is a quite one on the data front with little to cause any major movements, ahead of tomorrow which will bring an array or Euro data releases to watch out for. If you have a requirement in the coming months and are concerned, then please do get in touch with a member of the Currency Index team to discuss the various options we provide in able to help you maximise the return on your upcoming transfers.