Is It A Good Time to Buy Euros Right Now?

Is It A Good Time to Buy Euros Right Now?

Thursday, April 12th, 2012

Planning a trip to Europe? Then like it or lump it one of the things you have to do first is change currencies. You can’t after all pay for dinner in the Eiffel Tower with US dollars, nor see Rome with UK pounds in your pocket!

But is now a good time to buy euros? To help you make up your mind whether now or later is the best time to change currencies, I’ve detailed below some of the factors influencing the euro exchange rate right now. Whether you’re jetting off to France or Spain, good luck getting a great exchange rate!

1. Elections in Greece (Good) 

Greece is due to hold its general election next month, and this could encourage euro weakness. This is because Greece’s mainstream political parties have been widely discredited following three years of spending cuts, prompting people to support extremists on the Left and Right.

The trouble is that these extremists OPPOSE the bailout program that has to date kept Greece in the euro. Hence markets are starting to feel nervous about this election, and that might soon prompt the euro to tumble. Which is of course great news if you’re about to buy some!

2. Spending Cuts in Spain (Good) 

The markets are also nervous about spending cuts being made in Spain right now, which could also cause the euro to decline. The problem with the cuts (to be precise) is that people aren’t convinced Spain can make them: the government has a history of backing out of its commitments.

This has caused borrowing costs on Spanish debt to rise, which is about as close as the markets can say to, “We don’t trust you. Do something to regain our trust, or we won’t give you any of our money.” Unless Madrid takes action then, that could soon be translated into euro weakness too, meaning you get a better rate.

3. Recession in the UK (Bad) 

If you’re reading this from the UK, one thing that might mean you get a worse euro exchange rate is if the UK re-enters recession. This is because if it does, then the markets will abandon the pound, which of course makes it weaker against the euro. So even if Europe remains stable, recession in Britain would put a spanner in the works.

The reason the UK might re-enter recession is because of continuing poor data in manufacturing. British manufacturing production has shrank 4 out o the past 5 months, causing concern that the sector just is not recovering. There is also the fact that Britain contracted 0.3% last quarter. So beware a UK recession if you’re holidaying in Europe!

Have a fantastic time on holiday! If you decide you like it so much you want to emigrate, contact us at foreign exchange specialist Pure FX for the best exchange rates. You can also email us at or call +44 (0) 1494 671800.

Author: Foreign exchange specialist Pure FX, Image by Images_of_Money

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