USD EUR pulling market strings

10 June, 2015

Matthew Boyle

Whilst economic factors always continue to play their part in market movements, social and political events are having a overriding impact at present. With ongoing discussions over the Greek situation pushing strength into the Euro, the weak USD is further aiding sterling strengthen against the single currency. Yesterdays UK trade balance release showing an improvement did little to stem the Euros gains, and news that HSBC are to shed 50k jobs in the UK only aided the Euros advances. The mornings release showing Eurozone GDP as expected allowed the Euro to gain around half a cent against the Pound. Data from the U.S yesterday afternoon did little to make any waves, and the strengthening Euro and its “see-saw” effect with GBP/EUR rates again helped push Euro strength.

It would seem at present more so than ever USD/EUR rates are pulling the strings in the market, and against the Pound as one loses ground the other gains. Whilst the Greek situation plays on concerns for growth and a subsequent interest rate hike looms over the UK, the weak greenback is only helping the single currency gain. Be aware therefore that movements in USD are heavily affecting those of you with Euro purchases. With GBP>EUR rates taking a fair hit over the past week they are now back down to levels we previously saw in February. And whilst some of you are still hoping on 1.40, taking the rates in context they are still extremely good –above the levels of 2008. With the ongoing weak USD we may see GBP>EUR rates drop further, unless of course the Greek agreement breaks down which at present seems unlikely.

Today we have a relatively quiet day in the way of data, the main release being from the UK – Industrial manufacturing data, the NIESR GDP estimate and Bank Of England Mark Carneys speech, with a RBNZ interest rate decision late evening. Carney seems to take a more pragmatic approach as opposed to the often talked up spin Draghi seems to deliver, so any address to UK economic concerns may not be entirely positive for the Pound. Should you have any upcoming transfers to make speak to your Currency Index broker today for some friendly and professional guidance on how to try and avoid any potential movements in rates and help save you money on your international transfer.