Monday, 2 November 2015

Monday, 2 November 2015

Unexpected moves in the currency market

A new week brings a new month and unbelievably there are only eight weeks left until Christmas but there is still plenty for the heads of the central banks to ponder before they can look forward to their winter break.

Last week brought some unexpected moves in the currency market which saw the pound climb back over 1.40 against the single currency. The U.S Federal Reserve interest rate decision on Wednesday evening didn’t spring any major surprises but did lead to GBP/EUR receiving an unexpected boost. Then on Friday afternoon, rather unexpectedly, the pound went a run which saw the currency pair break through the €1.40 barrier for the first time since August, reaching a high of 1.4023.

With a rate hike from the U.S. central back still firmly on the cards in December, investors pulled out of riskier assets and headed into the dollar leaving the pound to take full advantage. However, the euro did manage to claw back some of the ground on Friday morning after some positive eco-stats from the euro-bloc. The unemployment rate in the Eurozone fell to 10.8% while Italian unemployment fell 0.1% to 11.8%. The releases helped the euro gain across the board which briefly saw GBP/EUR dip back below 1.39 to a low of 1.3891.

Glimmer of hope for the ECB

On top of the positive unemployment figures there was also some good news regarding the Eurozone’s inflation figure. Statistics agency Eurostat announced inflation in the euro-bloc had returned to zero in October ticking up from -0.1% in September. According to Eurostat estimates price growth in alcohol, tobacco and food increased but warned energy prices were still considerably lower than this time last year. Although the figures released by Eurostat are only an early flash estimate the inflation reading will give the European Central Bank a small boost following Mario Draghi’s comments two weeks ago. In ECB’s last statement Mario Draghi suggested the central bank could be prepared to extend their extravagant stimulus programme in December because of the Eurozone’s current inflation level. With a small rise in inflation and unemployment falling could we see the ECB hold off from implementing more quantitative easing (QE) until the New Year? Only time will tell but if the ECB don’t expand their stimulus programme in December the euro could start to claw back some of the losses it has sustained over the past few weeks.

Are you looking to purchase euros?

Friday’s gains means the pound has now recovered virtually recovered all the ground it lost last month. The currency pair has risen almost 5% from the low of 1.3387 we witnessed on the 13th October, which means converting £250,000 today will net you nearly €16,000 more than three weeks ago.

If you are looking to buy or sell euros in the coming months and want to ensure you are making the most from you transfer contact our dedicated currency brokers today for a no-obligation consultation. As experts in foreign exchange they 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.

One of the most important actions that a buyer / seller has to undertake is to use a specialist currency broker, rather than a bank when sending money to or from France.   Foremost Currency have been the dedicated and preferred brokers for Allez-Français clients for over 10 years now, and we have known Robin & Adam on a personal level for around 15 years. They secure preferential rates for our clients, and we can testify that they get the money to the right place at the right time. (Not all companies or banks manage that we can assure you). We see Foremost Currency as an integral business partner, and we share a common goal, to provide our clients with excellent levels of service.
For more information, contact : Adam Bobroff 01442 892060
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