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Prospect of Euro, ECB Aid  to save Spain boosts the euro;

Euro, ECB Aid


Peter Lavelle

Welcome to the Pure FX account of this month’s changes in the euro exchange rate.

This is intended as a brief guide to movements in the euro, to put you in the best position for when you exchange currencies for your Cyprus property.

Exchange rate changes:

UK pound to euro (GBPEUR):

1.2811 on July 30th.

1.2598 on August 29th.

-1.663% change.

What affected the exchange rate this month

The Euro made significant gains against the pound this month, chiefly on expectations that the ECB will soon intervene to (potentially) end the debt crisis Euro, ECB Aid. Prospect of Euro, ECB Aid  to save Spain boosts the euro

Speaking at the beginning of August, ECB president Mario Draghi said he would do “whatever it takes to preserve the euro.” Since then, it has emerged he plans to buy Spanish and Italian government bonds, making it cheaper for these countries to borrow, and thus reducing the intense financial pressure they feel while they reform their economies.

If the central bank does intervene, it could remove one of the chief anxieties about Europe’s debt crisis i.e. doubts about the lengths to which the region’s richer countries will go to aid indebted Spain and Italy. Hence, for the moment, the rising euro.

What will happen next to the rates

Crucially, these current gains in the euro exchange rates are based on little more than speculation. The European Central Bank has yet to release substantial details about its plan to buy Spanish and Italian debts, meaning the scheme could (potentially) turn out to be a damp squib.

Paul McNamara at investment management firm GAM for instance notes: “Prices are only where they are now because there is a very material expectation priced in that the ECB will intervene.”

Hence if it turns out otherwise, this euro strength could quite easily become a castle built on sand. If the ECB disappoints, look out for the euro sinking in the not-too-distant future.

How this affects your foreign exchange transfers

If you’re in Cyprus, a strong euro is useful if you plan to repatriate funds to the UK. It after all means that, when you sell euros to buy sterling, you get more pounds in the process.

If on the other hand you plan to buy property in Cyprus, keep an eye on the euro exchange rate. If the European Central Bank disappoints, as is quite possible, we can expect the pound to firm up against the common currency quite shortly.

Get in touch

I do hope this post has been useful to you.

We will return with our next foreign exchange update next month. In the meantime, if you’d like to  discuss transferring money to Cyprus, visit us at foreign exchange specialist Pure FX. You can also call +44 (0) 1494 671800 or email enquiries(@) We’d be delighted to help with your enquiry.


Euro, ECB AId

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