Latest Euro Exchange Rate Update

The Euro has continued to perform poorly this week, although not without minor signs that the currency is stabilising. The European Central Bank (ECB) yesterday voted not to change interest rates, leaving them at 1.0%, although ECB President Mario Draghi admitted that the Eurozone was experiencing “High uncertainty and downside risks”, fuelling further speculation that they would have to cut the rates later on this year.

The Euro did, however, see a slight resurgence against sterling on Thursday, when the sales of Spanish bonds went far better than expected. However, any gains were offset by the disappointing results of Italian debt auctions. The 4.75 billion euros worth of debt fell below industry expectations, and, in doing so, weakened the Euro further on Friday. This has caused the Euro to be on the same levels against sterling that we saw last week, giving us the best rates for transferring pounds into euros since 2010. It must be pointed out, however, that sterling is still very weak, and analysts expect the Euro to recover against it, albeit slowly. However, with no clear resolution to the crisis in sight, it is impossible to tell when this recovery will begin. The fact that the Euro has remained at similar levels for the past weeks leads many analysts to believe that it has stabled for the time being.

Sterling has had a surprisingly strong week on all fronts, further repressing fears of recession. The Bank Of England defied expectations and voted against any more quantitative easing for January, although many believe more QE is necessary and that the BOE are simply putting it off until February. Other UK data was negative, with manufacturing being down by 0.6%. The Bank of England also voted to keep interest rates at 0.5%, although this came as no surprise as they’ve remained unchanged since April 2009. The UK has also seen poor retail sales this month, with even larger businesses, such as Tesco, reporting low sales figures for the Christmas period. Despite this, the data wasn’t nearly as bad as expected, and combined with the lack of QE this month sterling seems to be keeping itself stable and strong against an ever-weakening Euro.

For the time being, as well as holding on to its strength against the Euro, sterling had recovered greatly against the US Dollar, managing to recover from a three month low. Not helping the Dollar has been President Obama’s decision to seek a further $1.2 Trillion rise in borrowing in order to meet deficit costs. The Republican members of congress have, of course, attempted to block it, and this being an election year, it is likely the dollar will fluctuate rapidly in the months leading up to November; in the last 24 hours Euro weakness has had a knock on effect of causing USD strength to the tune of 2c against the Pound, not good news if you are looking for good rates for sending US Dollars.

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