Pound/Euro rises after ECB press conference

Thursday 6th November 2014 
The Sterling/Euro exchange rate has rocketed today, following comments by the European Central Bank (ECB) president Mario Draghi, as I predicted could well happen in my post earlier this week.

Central Bank Decisions and the Pound/Euro exchange rate 

Both the UK and EU central bank announced their latest decisions on interest rates today. There were no surprises, with both keeping their benchmark rates on hold. However after the EU decision, the president of the European Central Bank (ECB), Mario Draghi, said in a press conference that the bank stands ready to give the Eurozone further economic stimulus "should it become necessary". Mr Draghi said: "Should it become necessary to further address risks of too prolonged a period of low inflation, the Governing Council is unanimous in its commitment to using additional unconventional instruments within its mandate." 

Markets have taken this as a negative sign for the Eurozone, and the Euro weakened accordingly. As you can see form the chart below, there was a significant spike of around 1 cent, bringing the GBP/EUR rate to within a cent or so of the highest it’s been in 6 years. 

What next for Pound/Euro? 

To me the trend is just repeating itself. Many times over the last few months we have seen rates reach this level, before dipping back off again. Without anything on the horizon likely to strengthen the Pound, I think there is a good chance we could see the rate drop back again. If you need to buy Euros, I would consider locking in a rate now while it’s so good. You can fix the current rate for up to 2 years and only lodge 10% of what you want to convert. 

Euro sellers have a tougher decision. Longer term forecasts suggest the rate getting to €1.30, but short term you could see moves in your favour. If you need to buy or sell Euros, or indeed any international currency then click below to make a free enquiry on the rates I can source for you. I can help with bank to bank transfers from amounts from £5k to £5m. I’m afraid I cannot help with cash or holiday funds. 

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Pound/Euro hits new 2 year high €1.28+

Thursday 25th September 2014 
The Pound/Euro rate has surged today, smashing through the €1.28 level to a fresh 2 year high. In fact this is now very close to the best Euro buying rates we’ve seen in 6 years. 

Pound/Euro level breaks €1.28, why has this happened? 

There are 2 reasons for the rise, and both involve the heads of Central banks. Early this morning we saw the European Central Bank president Mario Draghi give a speech, in which he said that they were willing to instigate further stimulus measures if necessary. In other words, it’s likely they will pump money into the economy to try and spur it along, and this has weakened the Euro making it much cheaper to buy. 

He said that "We stand ready to use additional unconventional instruments within our mandate, and alter the size or composition of our unconventional interventions should it become necessary to further address risks of a too prolonged period of low inflation". He also forecast only modest growth in the second half of this year, due to "weaker than expected" preliminary economic data over the summer. 

This afternoon, it was the turn of the Bank of England governor Mark Carney. In his speech which you can read in full here, he said that “with many of the conditions for the economy to normalise now met, the point at which interest rates also begin to normalise is getting closer. In recent months the judgement about precisely when to raise rates has become more balanced.” Adding that “While there is always uncertainty about the future, you can expect interest rates to begin to increase.” 

This has really given the Pound a push higher, and you can see the results of these comments from the ECB and BoE in today’s GBP/EUR chart: 

 

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Will rates keep going up? 

Nobody can predict where rates will go, but I think all the good news about the UK economy is now priced into the market, and I personally can’t see much more gains to be had. 2 years ago we were in a similar position, with many thinking the rate would break €1.30, but within 6 months it was down at €1.15. 

I’m not suggesting it will plummet again, but with the future of the rate impossible to forecast, if you needed to buy Euros is it worth risking these amazing levels currently available? I think those that do have much more to lose than to gain. In my view, you are holding out for an inch and risking losing a yard! 

How to get the best rates of exchange

Whether you are buying or selling Euros, Dollars, Swiss Francs, Aussie Dollars or any international currency, I can help you achieve commercial exchange rates very close to the mid-market level. I also provide various contract types to help protect against the market moving against you. Using my service exchange rates can be fixed for anywhere up to two years into the future, removing uncertainty, fixing a sterling price for your overseas property or imported goods or services. 

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