Today’s US FED Interest Rate Decision Likely to Affect Global Markets (Matthew Vassallo)
Today’s much anticipated interest rate decision by the US Federal reserve, is likely to have an influence on the global currency markets.
This means anyone with a GBP/EUR currency exchange to make should be keeping a close eye on market developments throughout the day.
Whilst there is no direct correlation, the high chanced of a rate hike means that investors could well move their money away from riskier currencies and back into the USD.
With pressure on both the UK and Eurozone economies this is harder to dissect but instinct is that the EUR will be seen as the weaker of the two and as such we could see EUR positions sold off this evening. In turn we could see EUR weakness against the Pound but whether or not it will be enough to push the apart through 1.20 I’m not so convinced.
The single currency has come under pressure since last week’s announcement by European Central Bank (ECB) President Mario Draghi, that they would be extending their current monetary policy programme beyond the current deadline of March 2017. With the new timeline set to continue their bond buying scheme until December next year, the markets immediately took this a sign of weakness in the Eurozone economy and the EUR weakened as a result.
Whilst this announcement was at least in part expected, it is proof that investor confidence in the Eurozone region is low and the Pounds value was inadvertently pushed up as a result of this.
GBP/EUR rates have moved through 1.19 and whilst I expect the EUR to find support around the 1.20 level, it is becoming increasingly clear that the EUR is unlikely to move back to the high we saw a few months ago, so those clients holding EUR positons should act accordingly. The EUR is still trading at extremely attractive levels against the Pound when you consider history on the pair and with so much un certainty surrounding the Eurozone, both politically and economically, now could be the time to act.
If you have an upcoming GBP or EUR currency exchange to make and you are concerned by the increased market volatility of late, it may be wise to look at protecting the gains you’ve made, or limiting your losses with one of our forward contracts, rather than gamble on what has become an increasingly volatile and unpredictable market.
If you would like to be kept up to date with all the latest market movements ahead of your currency exchange, or simply wish to compare our award-winning exchange rates with your current provider, then please feel free to contact me on 0044 1494 787 478 and ask one of the team for Matt. Alternatively, I can be emailed directly on email@example.com