Pound Euro drops as Spain consider bailout once again – Interest rate decisions tomorrow will be key for exchange rates

Far from surprisingly, Spain is reported to be ready to  accept a Euro zone bailout in the coming few weeks, although Germany is trying to slow things down. Spain  had appeared to be stalling over these last few weeks but this has all happened so quickly that a bailout could happen as soon as next weekend.

There  is now a great deal of uncertainty as to how and when aid for Spain will come  and whether it will be a bailout or not. With this very big unknown there should  be some volatile days ahead affecting money transfers. The  verdict appears to be that if Spanish borrowing costs come down to a more  manageable level then that should favour the Euro. It is for this reason that  GBP EUR has room to slide lower to the 1.20/1.21 levels especially as it will open the door for Mario Draghi to start his bond buying plan of action.

Tomorrow morning sees the Spanish 5 year bond auction ahead of the European  Central Bank (ECB) meeting which will set the tone for what should be a very  eventful day! The markets are of course awaiting the Bank of England and ECB  decisions – Although no change is expected, any comments from Mario Draghi  should make for interesting listening as they often have a direct impact on the  Euro.

Most importantly as well tomorrow we have the interest rate decisions for both the Bank of England at 12:00pm and the European Central Bank at 12:45pm with a press conference from the head of the ECB at 13:30pm –  Investors will no doubt be hanging off of his every word so expect some market volatility during this release.

If you have an upcoming requirement to either buy or sell Euros then feel free to contact me directly [email protected] and I will be happy to assist you both with getting a great rate of exchange and the very best in service.