GBPEUR rates have hit fresh highs this week already as we run towards the end of the month. Levels have traded over 1.20 as a further host of UK data outperformed including house prices and manufacturing figures which were the highest seen in a prolonged period of time. Many had thought that following the good data sets we saw through November, Decembers data would miss the mark and not match them creating weakness and a correction in Sterling’s price. However the first lot of data seen in December has already missed that and created this higher levels.
It again goes to show the contrast between the UK and Europe’s financial position and forecasts. The single currency has been struggling recently with even the central banks moving to try and accelerate any form of grown. Unemployment is still climbing in the troubled states, Greece continues in a recession that has lasted over 5 years and even some of their “better” performing countries have recently had their credit rating downgraded. This has helped facilitate this current high level to buy the single currency which is up towards a 11 month high, up almost 6% since August. This difference is the equivalent of a £8,000 saving on a €150,000 purchase.
So do I buy now?
My view is that the trend does seem to be in the favour of Euro buyers, or in fact anyone selling the Pound current so rates may improve. However we also have to equally respect the high that we are at now. Depending on the amount you are moving and the timeframe you have remember that you don’t have to trade all at one point in time. I would be looking to limit my exposure by trading a proposition at the moment to take advantage of these high.
This week data to watch includes European GDP figures tomorrow and interest rate decisions by the central banks both side of the channel on Thursday. Both have the potential to move rates significantly if there is any surprises. I personally don’t expect any policy change due to it being December, central banks have been against change historically this month due to the shut down over the festive period.
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