Forex Weekly Round Up 7/3/16 – 11/3/16

Thursday signalled one of the most volatile days in currency markets following the ECB press conference and rate decision. As expected by markets the ECB cut deposit rates by 10 basis points further in to negative territory to -0.4% – which means the ECB will be charging banks more to hold their overnight funds and thus incentivising banks and financial institutions to increase lending activity to ultimately increase economic output.

This went hand-in-hand with the marginal lending rate also cut from 0.3% to 0.25%, which means banks, and financial institutions will be charged less for borrowing from the ECB overnight. Furthermore, Mario Draghi has also increased the quantitative easing programme by €20bn a month, bringing the asset purchase programme to €80bn from a previous of €60bn.

Off the back of this EUR depreciated across the board massively with both GBPEUR and EURUSD reflecting the negative sentiment in the Eurozone given the interest rate cut.

However, the gains made against the EUR were only momentary as in the following press conference Mario Draghi implied interest rates would stay ‘very low’ for at least another year and played down the speculation of further interest rate cuts. As a direct result to these comments; we saw EUR strength return causing EURUSD, GBPEUR and GBPUSD to dramatically retract the previous gains made.

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Here are the exchange rates taken at 13:00 today. Please note that all conversions are based on interbank rates without any spreads and should be used only as a guide. For live ‘spot’ and ‘forward’ prices please feel free to drop us a line.

GBP/USD 1.4289
GBP/EUR 1.2877
USD/EUR 0.9008