Currency Market Update

GBP/EUR

Range of the week: 1.2322 – 1.2546

Variance of the week on £10k €224

The last 7 days has seen the GBP/EUR rates at the lowest level since the end of June after the ECB announced its unlimited bond buying programme giving welcome relief to our Euro Sellers. This may be a great opportunity for clients looking to convert their Euros back into Sterling as this optimism on the fortunes of the single currency may be short lived once focus shifts back to the poor health of the struggling EU nations. Concerns have already been rising this week that Spain would soon request a bailout.

There is much debate about the timing of the bailout amongst the EU countries at the moment which the French, amongst others, keen to see this take place sooner rather than later. The delay in a Spanish decision comes from a reluctance to take on the new conditions that will placed on Spain as part of any bailout funds.

The Germans have so far disagreed with the French position and argue that the Spanish should wait until borrowing costs become unsustainable before acting. The fear from Berlin is that any premature bailout would spook investors rather than reassure them. Europe as ever seems unable to portray one view on the best way forward.

Also in Germany this week we had the latest ZEW survey which is a sentiment survey giving experts views on the outlook for the German economy. At -18.2 this figure beat expectations and previous months figures, however, still indicates a slowdown over the next 6 months.

Today also saw the release of the minutes from the Bank of England’s September meeting where there was a unanimous decision to leave QE unchanged. Most of the members remarked that this was a relatively straightforward decision. They didn’t give much away about future plans as they stuck the neutral stance that they will monitor the next few months economic trends to get further insight as to whether additional stimulus would be required.

As always do not hesitate to contact us should you have any currency exchange related questions.