After yesterday’s PMI ( Purchase Managers Index ) Service Sector figure for January was released, we have seen Sterling gain ground over the Euro. This was due to a higher than expected result which has been attributed to cheaper business running costs caused by the drop in oil prices. More significant however was the European Central Bank (ECB) toughening its stance with Greece by restricting financing to the country’s banks. The ECB stated it was due to the fact it could not assume a “successful” deal on Greece’s €240bn bailout.
The ECB will no longer be willing to accept Greek Government bonds as collateral for lending money to commercial banks. This will put further pressure on Greek banks due to the increased expense. This announcement saw GBP/EUR break the 1.34 mark today. Giving Euro purchasers an excellent to opportunity to buy. I personally vote on the side of caution and feel if you are looking for the rate to hit 1.35 you are entering into the realms of speculation.
The BOE (Bank of England) Interest rate decision has just been released and as expected there was no change with rates being held at 0.5% . However it will be interesting to see if any of the MPC (Monetary Policy Committee) changed there vote from last month. This data will be released later in the month and can cause market volatility so keep your eyes peeled.
With the general election looming, I feel there is a small window of opportunity to take advantage of the current multi year highs for Euro buyers. During the build up to a general election we will see political uncertainty which historically will cause the currency in question to weaken in value. To procrastinate now, looking for slight gains could cost you.
If you would like to get in touch to discuss these matters further, feel free to get in touch with at [email protected] or feel free to call on 01494 787 478 and ask for Daniel Johnson.