Currency News from Currencies Direct

  • GBP/EUR recovers from 3-week low

    Staying on top of the latest currency news can help you time your transfers more effectively, so find out what you should be looking out for over the next couple of weeks…

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    Although Sterling was one of the currency winners of September, GBP/EUR sustained a run of losses at the start of October.

    The pairing slumped from €1.1356 to €1.1122, but has since pushed back above the €1.12 level.

    EUR/GBP, meanwhile, has spent the last week climbing from £0.8805 to £0.8991, while EUR/USD has been fluctuating between $1.1816 and $1.16855.

    What’s been happening?

    Although the euro came under pressure following the German election (with Chancellor Angela Merkel being forced into coalition negotiations after her party experienced its worst result since 1949) the common currency still beat the pound into submission as autumn began in earnest.

    The pound weakened across the board following the publication of less-than-impressive UK manufacturing and construction PMIs.

    The surprising contraction in construction was particularly concerning and added to concerns that the UK’s growth outlook dimmed in the third quarter.

    Sterling’s slide to a 3-week low against the euro was also the result of political concerns amid speculation that Prime Minister Theresa May could be ousted from her position following an issue-laden speech at the Conservative Party Conference.

    GBP/EUR losses, while notable, were slightly limited by the uncertainty inspired by Catalonia’s recent independence referendum. Catalonia breaking away from the rest of Spain could have serious repercussions for the nation, and the Eurozone as a whole.

    The euro’s performance against the US dollar was also less impressive than against its British peer thanks to rising bets that the Federal Reserve will follow through on plans to increase interest rates once more in 2017.

    What do you need to look out for?

    The situation in Catalonia will remain a hot topic in the weeks ahead, with further unrest potentially undermining demand for the euro.

    GBP/EUR investors will also be paying close attention to the fifth round of Brexit negotiations, which kicked off this week.

    According to recent reports, PM Theresa May is demanding flexibility from both sides, but the EU’s chief negotiator Michel Barnier asserted; ‘There is a clear sequencing to these talks. There has been so far no solution found on step one, which is the divorce proceedings, so the ball is entirely in the UK court for the rest to happen.’

    Meanwhile, the euro could be pressured lower if US data continues supporting the argument in favour of a rate hike in December.

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