The week ahead – euro bond market

GBP EUR Looks to Employment Figures for Support

As regular readers will now the tide in Europe has been changing and a more positive tone has been introduced. Originally from commentary by the Central bank stating that everything will be done to keep the Euro. We all now know that this is thought the creation of a bond buying program. The speculation for this program is one of the main reasons why exchange rates have changed so much. The Euro has improved by 2.5% in nearly 3 weeks as a result.

The next stage of this is Wednesday which the day the markets are expecting them to start. They are buying 3 year bonds in Spain, Italy and Greece. All these bond yields should drop as a result which will further evaporate the concern about a bailout being needed. I personally would be very surprised if we did not see the euro gain as a result. This will make it more expensive for Euro buyers and is another opportunity for any Euro sellers reading this.

The change expected could result in as much as a 2 cent change making a €2,000 difference for each £100,000 transferred. Other data this week to watch is UK Trade figures tomorrow and UK Unemployment also due on Wednesday. From the Europeans we also have Consumer and Jobless figures both on Friday.

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Thank you,

Steve Eakins