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Will the ECB Extend Current QE Programme? (Matthew Vassallo)

Tuesday, November 29, 2016 2:25
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The EUR has lost some ground against its Sterling counterpart over the past couple of weeks but still sits relatively close to a three-year high. It has seen a more dramatic drop against the USD and this is likely due to the prospective interest rate hike by the US FED next month.

Head of the FED Janet Yellen gave strong indications that the current economic conditions inside the US warranted another rate rise, which if it occurs, will be exactly a year after the last one. This is now being priced into the current EUR/USD exchange rates by investors and whilst we could see further USD strength should it come to fruition, it is more likely we will see the EUR snap back if for any reason the FED go against the current thinking.

Personally, I do expect the FED to act, so it may be wise to lock in any short-term EUR/USD trades prior to next month’s meeting.

Looking at GBP/EUR rates and it is more difficult to dissect, due to the on-going problems facing the UK economy at present. In particular, the ruling on Article 50 and when, or even if it can be triggered without having to be ratified by UK MP’s. Whilst I expect our Brexit to go ahead as planned any delay could put further pressure on Sterling, which would inadvertently boost the EUR value.

However, the key point for EUR sellers is whether or not the European Central Bank (ECB) will extend their current Quantitative Easing (QE) programme? This in my opinion is highly likely, due to growing concerns about key member states economies such as Italy and France. Any extension beyond the current cut off of March 2017 will sap investor confidence and the EUR will likely suffer as a result.

With their meeting on December 8th expect the markets to start pricing in a likely outcome, so if you are holding EUR and do not want to gamble on the result of this decision, it may wise to lock in any GBP/EUR trades prior to this date and remove any risk and uncertainty.

If you have an upcoming EUR currency exchange to make and you are concerned by the increased market volatility of late, it may be wise to look at protecting the gains you’ve made, or limiting your losses with one of our forward contracts, rather than gamble on what has become an increasingly volatile and unpredictable market.

If you would like to be kept up to date with all the latest market movements ahead of your currency exchange, or simply wish to compare our award-winning exchange rates with your current provider, then please feel free to contact me on 0044 1494 787 478 and ask one of the team for Matt. Alternatively, I can be emailed directly on


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