Super Mario Rocks The Euro Boat

4 September, 2015

Simon Eastman

Over the past month the pound to euro exchange rates have faltered widely, mainly down to China and their monetary policy stance recently. We saw them cut interest rates, sending shockwaves through global markets, with the pound suffering dramatically against its major pairings.

There has been 3.5 percent dip against the US dollar and over 5 percent dip against the single currency in the past month which has left those with house purchases around the Med stretching their budgets, having been used to exchange rates around the 1.40 mark for so long now. A stark warning to how quickly the tables can turn as sentiment shifts due to reaction from economies seemingly way outside what one would expect could have an impact. The Greeks got their bailout and the euro gained momentum, making a purchase of €200,000 some £7,500 more expensive!

Then yesterday we saw another shift as the ECB held their 6 weekly interest rate meeting and press conference. Rates and QE were held unchanged as expected but what caused the commotion and subsequent euro weakness was comments from President Draghi suggesting due to inflationary pressures they are keeping their options open when it comes to keeping stability within the Eurozone economy which may include further introduction of more QE on top of the current multi billion euro package which is being drip fed each month already. The result was a 1.3 percent drop to the US dollar and over 1 percent drop against the pound – light relief for anyone with an upcoming euro purchase to make.

Today is another busy day for ecostats so it’s worth not taking yesterday’s gains for granted. As discussed in Thursdays report, forward contracts are a fantastic way to lock into rates whilst up and avoid the budgeting worries of a falling market. The gains yesterday may be short lived so worth considering, certainly for any short term requirements this month.

The week concludes with a G20 meeting, Swiss inflation data and then we head across the pond to get US non-farm payroll and other key jobs figures including unemployment rate, plus the Canadians get in on the act releasing their employment stats too. This all happens at 1.30pm so worth avoiding trying to trade at this time, earlier in the day would be advisable unless you’d prefer to gamble across one of the most key data releases of the month!

Contact the team without delay for some friendly guidance on your upcoming transfer.