GBP/EUR exchange rate rally stemmed by positive EU data (Steve Eakins)

GBP AUD Opens the Week in a Well-Worn Range 

GBP/EUR rates have been governed hugely by inflation data in the UK and the Eurozone over the past few months. Each has been posting severely poor results, and each data release has caused sharp falls on one currency against the other, contributing to the rollercoaster on GBP/EUR rates between 1.33 and 1.39 this month.

The Euro weakened massively this week as a result of news coming out of the USA. The Federal Reserve Bank of America hinted that a rate hike will occur in the US economy as early as December. A longstanding rule of thumb in the currency markets is that because the USD/EUR is the most traded currency pair in the world, sudden strength in one currency normally results in the opposite effect for the other.

In this case, prospects of higher returns from a rate hike in the US economy caused significant capital to flow out of the Euro and into the Dollar. The weakening Euro is why GBP/EUR shot up this week.

Inflation data, once again, is what is causing GBP/EUR rates to shy away from 1.40 once more, and seem to be on the brink of reaching below 1.39.

Inflation forecasts for the Eurozone as a whole were raised to 1% in total for the year and the Eurozone on a monthly basis are now out of negative inflation. Furthermore, unemployment figures came in much better than expected and confidence in the Euro has returned some of the lost capital to the USD.

As this recent boost up against the Euro wasn’t due to any changes in the performance of the UK or Eurozone economies, then these are largely artificial and unlikely to be available on the markets for a sustained period. The scramble of Euro buyers while the currency is at a two month high will cause the value of the Euro to rise through increased demand, making a purchase with Sterling ever more expensive.

With these GBP/EUR rates being gifted from surprise news coming from the US I strongly suggest that anyone with Euros to buy before the end of the year should contact me on 01494 787 478 and ask the reception for Steve to discuss a strategy on your transfer to secure these rates of exchange before any further falls occur. Even if your requirements are not until 2016, these current GBP/EUR levels can be pegged to avoid any uncertainty in the months to come. [email protected]