Friday 4th July 2014
It’s been very quiet on the markets today due to the Independence Day holiday. There were developments yesterday however when we saw the Euro weaken after the European Central Bank (ECB) president Mario Draghi make comments about interest rates.
ECB comments weaken Euro pushing GBP/EUR above €1.26
European Central Bank (ECB) president Mario Draghi said yesterday that Eurozone interest rates will stay at 0.15% for an “extended period” of time. He also said that the ECB was “unanimous in its commitment” to using “unconventional instruments within its mandate”.
What does this mean? Well firstly low interest rates mean the EU is not an attractive place to hold funds. As a result investors sold Euros, weakening the single currency making it cheaper to buy, and as a result the Pound/Euro rate has broken the €1.26 level, and it’s now the best time to buy Euros for nearly 2 years.
How to take advantage of the current rate
While it’s impossible to know if rates will fall again, or rise further, now is certainly a good time to secure Euros given it’s the best rate for 2 years.
You can lock in the current rate even if you don’t need your currency now. A Forward contract allows you to reserve the current rate by lodging 10% of the total amount you want to convert. When you want your currency delivered to your account, you simply settle the remaining 90%.
In this way you can guarantee your rate, protect yourself against the market dropping, and budget effectively for your currency requirement; especially useful if you are buying property abroad for example.
Get in touch with me for a free consultation
To find out more about Forward contracts, get a free quote, or simply discuss your currency requirement click here to send me a free no obligation enquiry.
I can source rates for over 30 currency pairs, for example GBP/EUR, GBP/USD, Euros back to Pounds etc. – the rates I can achieve are up to 5% better than your bank or existing broker may offer, so why not get a free quote. It only takes a few minutes, does not cost or obligate you in any way, and you save thousands of Pounds.