The GBP/EUR rate moved back above the 1.10 level today, however dropped below that point at the close of business. The main reason for Sterling gaining against the Euro today was the good news regarding wage growth, which following a no change to inflation yesterday helped gain back the lost ground. Tomorrow there could be even further volatility with the latest inflation data for the Eurozone set to be released.
There has been much speculation from analysts over the future decisions of the European Central Bank and if they will taper the current Eurozone stimulus. There are thoughts that the current bond buying program will start to be tapered reducing the amount of bonds purchased by the ECB each month from €80bn.
In turn this will then lead to hope that the European Central Bank could cut interest rates. If that was to be the case then that would be a main driver for the GBP/EUR rate down to a parity level. In my opinion the Eurozone which has been booming form a economic perspective could be set to slow down a little. Its unsustainable for continuous strength to just keep happening, but inflation could well be the first indication of all being not what it seems. I would not be surprised to see the GBP/EUR rate back in the mid 1.10’s tomorrow around midday.
If you do have a question with regards to my forecast or have a different question please get in touch. When you come to moving large sums of money a movement of a cent can often relate to a significant difference in your returns. Helping you formulate a strategy could make sure you’re in the best position to exchange currency when the market is in your favor, please contact me Ben Fletcher at [email protected]