Will GBPEUR fall further this week?
The Euro hit a 5 week high against Sterling as fresh Brexit worries and the lack of any interest rate rise in the US benefitted the Euro. There was also positive economic news for the Eurozone as the latest Manufacturing PMI (Purchasing Managers Index) hit pre-Brexit highs.
The data also suggested order-inventory balances were at highs not seen since 2010 indicating the data will likely improve over the coming months. This was in contrast to Services PMI data which showed a fall to an 18-month low although, the reading was still within the growth range.
The Euro’s good run of form may continue this week with Inflation data published on Friday which due to the rising Oil Price is likely to show an increase. Inflation has been a major problem for the Eurozone, which remains almost stagnant for the last 2 years.
Mario Draghi has a speech today which will be closely monitored for references to the QE program. The QE program has been a bone of real contention for some within the Eurozone. Notably Germany who question the legality of it, as well as expressing bitter feelings towards Draghi’s low interest rates, which are crippling savers in Germany.
Almost the best time in 3 years to sell Euros for Pounds
The Pound’s recent run of form which saw it almost test 1.20 only 2 weeks ago has quickly reversed with the lack of clarity over Brexit still weighing down on Sterling. It could be many months or even years before the UK has a clear understanding of what Brexit is, and what implications it could have on the economy. That being said, the Eurozone does appear to have shrugged off post-Brexit gloom. With the upcoming US elections we may find further strength in the Euro and those looking to buy Euros in the near future, should consider doing so sooner rather than later. On the contrary, Euro sellers can enjoy 3-year highs against Sterling, and may be in for further strength as we approach the US elections in November.