Pound/Euro rises further as single currency weakens

Pound/Euro rises further

Pound/Euro rises further – The GBP/EUR rate has risen further this afternoon, as the single currency has weakened and become cheaper to purchase. A short while ago the European Central Bank (ECB) left interest rates unchanged. The ECB indicated that the rate will remain low or even lower for as long as needed. They have also said that they will examine the possibility of stimulus in the form of Quantitative Easing.

There was a chance they would cut rates today, but we think they’ll hold off until September. The EU is suffering an economic slowdown, with it’s largest economy Germany at risk of entering recession. It’s manufacturing is in crisis and some of its biggest companies have issued profit warnings. The EU in general also has high unemployment, that for young people is running at a staggering 50% in some southern European countries. For these reasons it’s highly likely we’ll see further Eurozone stimulus soon.

Pound/Euro 25th July 2019

This expectation has caused the Pound/Euro rate to rise today. This week, it has gone up by around 1.5%. As the Euro weakens and becomes cheaper to purchase, it also causes the USD to strengthen. So while GBP/EUR has risen for the second day, GBP/USD rates have not risen by the same margin. The inverse correlation between the Euro and US Dollar means that as investors sell Euros, they buy USD, giving the greenback some strength.

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