Indications from the ECB that the interest rate hawkishness that has been their signature for the past 18 months is over have weakened the euro to 5 month lows against the dollar overnight. It is also seen GBP/EUR move back near the top of its recent trading range. Changes in perception are now having an impact on prices and this is why dollar has been so strong of late. Oil has also continued to trade below $120 a barrel which will help underpin the greenback.

The MPC decision was pretty anti-climactic and was drowned out by the noise from across the channel. The vote was to hold at 5.0% and with no accompanying statement we will have to wait a fortnight until we know the voting record. We have moved overnight to a 17 month low against the dollar as bullish housing data from the US contrasted with worse than expected house price data from the UK. House prices have now fallen by 10% this year and with further worries over mortgage supply and the Government’s dithering over whether to cut stamp duty this picture will not change soon.

It’s a very quiet day today but indications for further euro weakness may be found in the Italian GDP figure for Q2 ahead of next week’s Eurozone measure.

From all at World First have a great weekend. 

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 Please feel free to contact me (jeremy.cook@worldfirst.com) if you have any questions or thoughts regarding these updates or if you are interested in a particular event in the calendar. If you would like to discuss your foreign exchange requirements, please contact our:Corporate Foreign Exchange Team on 020 7801 9050 or our Private Client Currency Exchange Team on 020 7801 9080.   

Disclaimer: The above comments are only our views and should not be construed as advice. You should act using your own information and judgement. Although information has been obtained from and is based upon multiple sources the author believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute the author’s own judgement as of the date of the briefing and are subject to change without notice.Any rates given are “interbank” i.e. for amounts of £5million and thus are not indicative of rates offered by World First for smaller amounts. E&OE. Definitions of jargon/market terms can be found in our Glossary of Foreign Exchange Terms.