The Euro’s movements last week were dominated by the European Central Bank and market speculation as to whether the bank’s policy would have the nerve to announce measures large enough to tackle the malaise in the Eurozone economy. With the 19-member currency bloc sliding into deflation and the economies of France, Germany and Italy all stalling, economists were expecting something big.
At the start of the week, the Euro was already trending at multi year lows against the Pound and other major peers. The shock decision by the Swiss National Bank to slash interest rates and ditch its exchange rate cap with the Euro had hammered the single currency lower.
Data released on Monday also weakened the currency as data showed that the regions current account surplus narrowed from €24.6 billion to €16.3 billion. Construction output on an annual basis however came in far better than forecast but that was widely ignored as the markets fixated on the ECB policy meeting.
As the week progressed, the Euro came under further pressure against all of its major peers as market attention focused on Thursday’s eagerly awaited European Central Bank policy meeting. Traders were watching and waiting to see if the bank will go ahead with launching a quantitative easing programme in an attempt to tackle the threats posed by deflation. Uncertainty over Sunday’s Greek elections was also weighing upon the currency.
The Euro tanked against all of its major peers and looks set to fall further after the ECB announced it’s larger than forecast quantitative easing programme. The ECB surprised economists by introducing a QE programme worth €1 trillion. That means that the bank will buy up to €60 billion worth of bonds and debts every month until September 2016. Economists had previously been expecting the monthly amount to add up to €50 billion.
‘The programme is credible for market participants. It will work because it is big, because it is strong, and because it is open ended, this is not about Germany, and this is about Europe. We don’t have a fiscal union, we don’t have a European Treasury, so we had to do it our own way, in a way that fits the way we are, which is a monetary union without a fiscal union,’ said ECB executive board member Benoit Coeure.
The single currency is forecast to fall further over the course of the weekend as the market focuses on Sunday’s Greek general election. – See more at: http://www.currencynews.co.uk/forecast/20150125-11582_euro-to-pound-exchange-rate-outlook-today-eur-gbp.html#sthash.40bRjXg6.dpuf