Euro to British Pound (EUR/GBP) Exchange Rate Climbing; German Imports Four-Year High
If you're looking to make an international money transfer, we recommend TorFX.
The Euro clambered higher against the Pound following the Bank of England’s (BoE) decision to maintain low interest rates of 0.50%.
Furthermore the European Central Bank (ECB) also maintained their current policy measures of 0.15% interest rates allowing the Euro to gain some stability in the currency market.
The Eurozone however seems destined to suffer following sanctions enforced by the EU and US against Russia. Countries such as Finland who trade predominantly with Russia are preparing for the possibility of economic crisis.
Russian President Vladimir Putin has enforced decisions to ban the importation of foods such as dairy products into Russia which will affect Eurozone trading partners.
Market leader in dairy produce Valio Oy commented they had: ‘halted all production lines making goods for sale in Russia. They will remain halted until we can sell in Russia again. Time will tell what the financial impact is.’
Finland will feel the backlash in an already fragile Eurozone recovery. Economist Anssi Rantala stated: ‘The impact of the crisis, and measures against Russia, comes through the Russian economy and its weak domestic demand, rather than directly [through sanctions].’
Rantala continued ‘Russia is for many Finnish companies a kind of domestic marker. Finland is among the most affected by the weakness in the Russian economy.’
Conversely the Pound is presently trading down in the currency market following the Bank of England’s interest rate decision. However, the currency market eagerly anticipates the release of the meeting minutes toward the end of the month which will reveal if the vote was unanimous.
Next week however will signal the quarterly inflation figures which may allow the Pound to regain some lost ground in the currency market.
HSBC representative commented: ‘The next big UK related point of interest is going to be the labour market data next week and the Bank of England’s inflation report. [Sterling is] broadly moving sideways.’
As we enter the latter half of the year UK figures will be watched with scrutiny in order to determine how likely an interest rate rise is to occur before Christmas as the first major developed nation to raise interest rates since the global financial crisis in 2008.
The minutes will suggest the trajectory of the Pound in the coming weeks, however, some economists are beginning to speculate that the US Federal Reserve may raise their interest rates prior to the Bank of England’s rate hikes materialising which would allow the US Dollar (USD) to continue moving upwards in popularity.
The EUR to GBP exchange rate has traded within the regions of 0.7930 and 0.7970 on Friday thus far with a seemingly upward trajectory.
The Euro however is faltering in the currency market from global conflict pressures regarding Russia and Ukraine and recent negative data publications.
Forex expert Valentin Marinov stated: ‘President [Mario] Draghi recognised the risks stemming from geopolitical tensions that are reflected in recent weak economic data. The message was, however, that, if anything, growth outlook has become more uncertain and fragile.’
Friday has seen the German Trade Balance figure indicate that the June surplus has contracted in June, published at 15.0B, bypassing economists’ forecasts of 18.9B.
With German imports growing quicker than they have done in four years in June, Eurozone recovery looks even more delicate.