GBP/EUR Rates Drop to 1.26 (Matthew Vassallo)

GBP/EUR rates have dipped during Friday’s trading, following a volatile week for the currency pair. The key topic at present is how the European Central Bank (ECB) will deal with the on-going economic difficulties inside the Eurozone. With unemployment levels remaining high across the region and a very real threat of deflation in 2015, the ECB will soon have no choice but to act.

ECB president Mario Draghi is yet to instigate a full round of aggressive Quantitative Easing (QE), instead choosing the option of buying government issued medium and long-term bonds. Whilst this is a form of QE many believe it is not enough to counter the deep fiscal issues faced inside the Eurozone. I feel that the ECB will soon have no choice but to act and once they do we could see the EUR weaken as a result, with investors viewing it as a negative for the Eurozone economy.

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