GBPEUR rates and traders are definitely in the eye of the storm at the moment, the calm before the windy period. Later today the Europeans release inflation and unemployment data which will probably create the foundations for the forecast for Thursday which is expected to be a very busy day. This is when the central banks on both sides of the channel meet. There is a large expectation that we will see a host of new policies being introduced by the bank in an effort to push inflation up by lowering borrowing costs. When a central bank lowers borrowing costs it makes it less valuable and therefore cheaper to buy meaning euro weakness is wildly expected. Now the bank could cut interest rates, introduce new bonds or bring in new policies into the financial market pushing them to loan more money out. Any of these could weaken the single currency but we won’t know which route they will favour or if multiple methods will be introduced therefore the movement in the currency market could be significant.
The next question is when will be the best time to buy. Now the above is so wildly anticipated the market is expected to price in the expectation beforehand. This could be in the run up on Thursday or any time before meaning you will need to be reactive and pro-active, pro actively watching and reactive to the information. Here we are in the market from 7:30 till 18:00 watching the market for our client base proving a service to help them achieve the best price at the best time. If this is of interest feel free to contact me directly via [email protected]
Unfortunately EURO holders have very little to pin hopes on. They are certainly worried and rightfully so. The fundamentals still remain; the UK is expected to raise interest rates early next year whereas the Europeans are probably looking 2-3 years. This will make the Pound more valuable in the future and means a general long term trend of an upwards movement is most likely. GBPEUR traders needing to buy this year however should not be 100% confident that rates will be higher at the end of the year compared to now; with a housing bubble problem and a general election in the near term it could easily pull prices down at the end of the year.
For more information on the above feel free to contact the author – STEVE EAKINS – via email at [email protected]