Published On: Thu, Aug 24th, 2017

POUND LIVE: Pound at eight-year low against the euro amid fears of parity


Sterling lifted slightly against the euro on Thurday morning, but is still sitting at around 1.085 – rates not seen since in eight years. 

The fall is a blow to British holidaymakers heading to the continent, but is a boost to UK companies that export to the bloc.

The euro has been boosted in recent weeks by expectations the European Central Bank (ECB) could soon scale back its huge money-printing programme.

At the same time, weakened inflation in Britain is thought to have reduced the likelihood of the Bank of England raising interest rates.

Holidaymakers are now struggling to get more than one euro for every pound against the euro.

And this could worsen if the pound reaches parity against the eurozone currency, in line with many forecasts.

Simon Phillips, retail director at No1 Currency, said: “The euro’s strength and the fragile pound have conspired to leave British holidaymakers who are planning a trip to Europe with the weakest exchange rate for eight years.

“With no sign of significant relief against the euro, many will surely be considering travelling further afield to locations outside the Eurozone, where the pound will likely go much further.

“Those still planning to head to Europe must be savvy and shop around to make sure they get the best currency deal and minimise the affect of the current foreign exchange markets.”

Markets are now awaiting a speech by ECB president Mario Draghi at the Jackson Hole symposium, which could give more clues about the immediate future of eurozone monetary policies.

 

However, the stronger euro is a problem for the ECB, as it dampens inflation and hurst exports – which are important for the eurozone’s biggest economy Germany.

FXTM chief market strategist, Hussein Sayed, said: “ECB’s Mario Draghi refrained from giving any indications on future policy, when he delivered a speech at a conference in Germany yesterday.

“It seems he is trying to avoid commenting on monetary policy, after the Euro surged by more than 12 per cent on expectations of QE getting closer to an end.

“I believe Euro bulls will also be disappointed when Draghi speaks on Friday, as he’ll continue to shy away from any specific timing on tapering bond purchases.

“However, given the strength in economic activity and diminishing outstanding bonds available to purchase, the ECB has no alternative but to begin the normalisation process, and any pull back in the Euro will be seen as an opportunity to get in.”

More to follow…


Celebrity Funny Gaming
Health Food-Recipes Books
Sports Lifestyle Music
Movies Business World
Fashion Top Stories Travel
Technology Education

buzzfix TODAY

Videos

Most Popular Posts