Euro rate to fall if European Central Bank approves Quantitative Easing
Last night Germany’s Bundesbank came out for the first time and acknowledged that Quantitative Easing is not off the table and also mentioned negative interest rates.
This is a massive change as the Euro exchange rate has been climbing as foreign exchange traders continue to buy euros, as it means that Germany a long advocate of higher euro and higher euro interest rates admits that the Euro-Zone is struggling.
How will Super Mario Draghi react to this news – as it appears that the Euro-Zone is not a safe haven of growth as he has suggested.
My bet is that over the coming months as Russia stops buying Euros that the euro exchange rate will start to suffer and we can see euros to pounds rate head back towards 1.2500 or more.
I could be wrong – but i am willing to put a bucket of KFC on being right (our normal office bet – just ask our resident Arsenal supporter – he has bought me three this year after Chelsea wipe the floor with them 6-0)