Is now a good time to buy Euros?
Best levels since February and June 2020.
USD/EUR
We are currently trading at 19-month highs. It is an excellent time for US Dollar sellers.
GDP growth in the fourth quarter outperformed expectations growing by 5.7%, its best performance since 1984.
Going forward, the FED is still expected to leave rates unchanged before hiking in March, and we may still see other threats to the US Dollar, such as new covid variants and high inflation. The Omicron variant has still impacted the global economy coming into 2022. Consumer spending and government stimulus have helped this recent powerful rebound in GDP growth. The difference in policy between the Fed and the European Central Bank should favour the US Dollar over the Euro.
GBP/EUR
GBPEUR has traded in a wide range this week and has reached a 23-month high again.
We hit the elusive 1.20 last week only for the pound to rebound on the back of the latest UK employment data. Real wages fell in November, showing that the UK’s cost of living crisis is expected to worsen this year. However, employment figures came in strong, fuelling more speculation the Bank of England will raise interest rates.
The pound was lifted again following the removal of further covid restrictions, and the return to Plan A measures in England. The markets will now be watching to see how the ‘partygate’ scandal will unfold.
Despite a stronger pound, there has been some positivity in the eurozone. Last week Germany’s ZEW economic sentiment came in at 51.7, its highest score since July 2021. Meanwhile, France has posted its strongest growth in over 50 years. According to data released today, French GDP expanded by 7% last year. Its largest expansion since 1969, showing a marked recovery in the face of supply chain disruption.
The market has been in a fairly positive mood shunning the safe-haven Euro for risker, higher-yielding currencies.
Over the next few weeks, we will see the pair being pulled in both directions due to economic growth figures, consumer confidence, and the UK’s political situation.
The tensions in the Russia- Ukraine border will also be one to watch for its impact on the global economy. We may see investors re-verse on their risk sentiment and turn to safe-haven currencies again.
We are trading at very good levels for any Euro buyers selling Pounds or US Dollars. As we have seen over the last few weeks, the markets are fairly volatile.
It is always best to speak to an expert, even if you don’t have an immediate payment. Buying your euros in advance could be advantageous.
Speak to Spartan FX to find out your options and how you can take advantage of these recent rate spikes.