Monday, 20 July 2015

Monday, 20 July 2015

GBP/EUR exchange rates hit fresh highs

"Sterling went on the march against the euro with the currency pair rising from 1.3909€ to a high of 1.4400€, a level not witnessed since October 2007 ..."
Last week was a positive one for the pound which saw GBP/EUR exchange rates climb to their highest level for nearly eight years on Friday morning.

Following some positive comments from Bank of England Governor Mark Carney and the continued uncertainty surrounding the troubled Greeks, Sterling went on the march against the euro with the currency pair rising from €1.3909 to a high of €1.4400, a level not witnessed since October 2007.
GBP/EUR exchange rate graph

The latest move for GBP/EUR makes excellent reading for those of you looking to buy euros, after all its not every week you witness a 3.5% gain. To put the move in perspective, converting £200,000 into euros on Friday would have seen you achieve around €10,000 more compared to the same trade placed on Monday morning. The question is though, will it last?

Based on Governor Carneys comments last week the pound could be set for further gains against most of the other majors in the coming months. During a speech on Thursday evening Mr Carney indicated that interest rates could rise “at the turn of the year”, having already stated during last Tuesdays inflation report that a rate hike is on the horizon.
So we will see GBP/EUR continue to rise?

Not necessarily. Although a rate rise in the UK will undoubtedly lead to the pound strengthening as investors look for a higher return on their investments, the driving force behind GBP/EUR recent rise has been down to the turmoil facing Greece. However, on Friday afternoon there was a glimmer of hope for the troubled nation. Reports emerged midway through Friday that the German parliament had voted in favour of starting negotiations in relation to Greece’s latest bailout deal. The motion was passed with 439 MPs in favour of the deal, 119 votes against and 40 abstentions.
The Greece finance deal in numbers

Greece’s finance deal stands at a whopping €183bn, below is a quick breakdown of what is needed.
€86bn bailout from the European Stability Mechanism (ESM) and International Monetary Fund (IMF) – Needed to repay debts/interest payments and recapitalise the banks.
€50bn Trust Fund from privatising assets – The fund will be split into three pots, with €25bn being used to repay a recapitalisation loan for banks. €12.5bn to reduce the debt to GDP ratio and €12.5bn for investment.
€12bn Bridging loan – Required to repay European Central Bank debt by mid-August.
€35bn For Jobs and growth

So if Greece can secure the funds it needs to keep the country afloat then we could start to see the euro start to gain some momentum, but it is a big if!
Do you have a requirement to buy or sell Euros?

If you have an upcoming requirement to buy or sell euros in the coming months and want to ensure you are making the most from you transfer, contact Foremost today via our website .

Our brokers can help you achieve a rate of exchange up to 5% better than those offered by the high-street banks, while at the same time help protect you from any potential adverse market movements.
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