Currency News from Currencies Direct - Costa Del Sol

  • Dovish ECB meeting prompts GBP/EUR rally

    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…

    Latest currency news

    The pound has been putting on a mixed performance in recent weeks amid a flurry of disappointing domestic data, with Sterling only showing any notable movement against a significantly weakened euro.

    GBP/EUR has seen some large swings over the last two weeks but is pretty much back to where it began at 1.13, with EUR/GBP holding at 0.87.

    Meanwhile, the GBP/USD exchange rate has fallen from 1.34 to 1.31 and EUR/USD from 1.17 to 1.15.

    What’s been happening?

    The past couple of weeks have seen the pound suffer from a fair amount of volatility in the face of some mixed domestic data and renewed Brexit uncertainty.

    In terms of data, the main drag on Sterling came as both inflation and wage growth printed below expectations, with only some robust retail sales figures offering any support for GBP.

    At the same time the Pound has been undermined by growing anxiety regarding Brexit, with the government facing a couple of narrow votes in seeking to past its key EU withdrawal bill.

    However, GBP/EUR did briefly jump despite these concerns.

    This came in the wake of the European Central Bank’s (ECB) latest policy meeting, with the euro suffering a large sell-off as the bank pledged to leave interest rates on hold well into 2019, overshadowing the announcement that it would wind down its stimulus programme by the end of 2018.

    Meanwhile the US dollar was able to capitalise on the weakness in the euro to recoup some of the ground lost following Trump’s heated G7 summit appearance and latest Federal Reserve rate decision.

    What do you need to look out for?

    The short-term outlook for the pound looks set to revolve around the Bank of England’s (BoE) latest policy meeting later this week.

    Markets will be paying close attention to this month’s forward guidance as they gauge the likelihood that the bank could target a rate hike in August.

    Euro sentiment looks set to take another hit this week, with the Eurozone’s PMI data forecast to reveal another slowdown in growth this month, while a slowdown in inflation in June is also unlikely to do the euro any favours.

    The US dollar has seen its lead over its peers extended recently, with escalating trade tensions between the US and China helping to drive safe-haven demand.

    Look for this trend to continue if it appears Trump is set to heap further pressure on Beijing, with gains in the USD exchange rate also possibly being driven by the upbeat US economic data expected over the coming weeks.


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