EURGBP rates climbing

Rates climbing for euro sellers

the price of the euro is climbing at the moment against the Pound. The reason for this is demand for the currency as traders off-load their carry trades.  A carry trade is what the financial industry use to make money, they borrow in a low costing currency and invest in a higher return. So borrow in Europe at 0.05% and then invest in Australia where rates are over 3%.  The problem is that these investments are very open to risk of global growth and slowdown, so with concerns growing in China about growth these investments are being ‘unwound’. So they are reversing the position, selling AUD and buying EUROS.  This huge swing in demand is impacting both currencies values and helping people in the opposite direction.

So anyone with EUROS to sell are seeing an opportunity which many are taking full advantage of.

The next lot of China data is due on Wednesday evening so the best levels this week for Euro sellers are probably going to be Thursday.  EURO buyers mean the opposite however, that moving sooner rather than later may be wise.

For more information on how to maximise your trades on the market feel free to get in contact – Steve Eakins – hse@currencies.co.uk