Monday, 8 May 2017

Pound/Euro exchange rate forecast

French Election win for Macron


As expected, Macron won the French election yesterday defeating Marine Le Pen. It looks as though the currency markets had the result fully priced in to exchange rates, as there wasn't much reaction to the news.

Initially there was a slight strengthening of the Euro against other currencies, but it didn't last long and this morning GBP/EUR rates are settled back at around the €1.1850 mark. Against the US Dollar, the Pound is just below $1.30. It's a classic case of 'Buy the rumour, sell the fact'.

Since Theresa May called the snap election we have seen the Pound gain by around 3% against the USD, EUR and other currencies, as a strong majority will give her a much stronger hand and increase the chances she can make compromises with the EU when negotiations start in June.

I don't really think there's much chance of the Pound getting that much higher however because when it does look like it's going to rise, it's stopped in it's tracks by the fact that there are huge risks and unknowns ahead. Brexit uncertainty will surely sooner or later start to weigh heavily on Sterling and start to bring rates back down again.

This week, Thursday is the most important day for those that will need to exchange currency soon as we have 'Super Thursday' from the Bank of England (see more about this below).

If you have an upcoming currency transfer to make and would like to see what rate we can offer you, send a free enquiry today. 

What could move exchange rates this week?


Monday 8th May - We have already had UK House Price data that beat forecasts this morning helping nudge the Pound a little higher. EU investor confidence also beat expectations however, giving the Euro some strength and keeping GBP/EUR at €1.1850. Later this afternoon we have speeches by the US and Canadian Central banks may affect GBP/USD and GBP/CAD rates. 

Tuesday 9th May
- There are no UK releases today, so GBP/EUR will be driven by news from the EU including Germany Trade balance and Industrial Production data. Elsewhere, Australia has it's annual Budget Release that could move GBP/AUD. The USA also has speeches by central bank members; any hints of an interest rate hike may send GBP/USD lower. New Zealand Retail Sales numbers may also move GBP/NZD if they differ from the expected.

Wednesday 10th May - The only UK data of note is House Price data, so again exchange rates today will move from data from elsewhere. There is a speech by ECB member Mario Draghi, and he has the potential to strengthen the Euro and push GBP/EUR lower. The USA also has a raft of data in including Trade Balance figures and a monthly Budget Statement. It's a very important day for those looking to buy New Zealand Dollars as we have their latest decision on interest rates aet 10pm.

Thursday 11lth May - A very important day for the Pound as we have 'Super Thursday'. Today we will see the latest: Industrial & Manufacturing Production figures, Trade balance Numbers, an Interest Rate decision, the Quarterly Inflation Report, and a GDP estimate. Lots for the market to digest and it will be of great interest to what the BoE have to say about rising inflation and whether interest rates may go up soon. 

Friday 12th May - We end the week with a inflation numbers from Germany, EU Industrial Production numbers, and Retail Sales and Inflation numbers from the USA. 

If you are looking to get the best exchange rate, would like a quote, or simply to discuss which way exchange rates are heading, click here to make a free enquiry today.