Further Stimulus likely as ECB tackle to improve inflation

Inflation has been one of the biggest challenges for the Eurozone. For the last 2-years inflation has been sitting close to 0% despite numerous monetary stimulus packages from the ECB. Many question the effectiveness of Quantitative Easing from the ECB, and with political uncertainty ahead with the likes of Brexit, they may need to look at alternative options to help boost crippling inflation.

It is widely expected that Mario Draghi may add further stimulus to the QE programme, which currently sits at 80bn a month. And with interest rates close to 0% he has little options left but to utilise this in the short term.

We may therefore see further GBPEUR movements tomorrow, with rates likely to favor Sterling in the short term.

Friday’s consumer inflation expectations to give insight into post-Brexit mood

Consumer spending has been one of the few areas not hit by the Brexit vote so far, the survey which asks consumers how they expect pricing trends to change over the next 12 months could provide further insight into the post-Brexit mood amongst consumers.

One other factor that must be considered is the weaker Pound, prices will likely rise as businesses pass on the cost to consumers. We may in fact find an artificial boost to the price of goods in the immediate future, coupled with lower wage growth this could prove a concern for the economy.

If you are buying Euros in the short term, I am not expecting much movements beyond 1.19. This could in fact be the best opportunity to buy with further losses likely as we approach 2017.