The European Central Bank (ECB) today cut their main interest rate, from 2.5% to 2.0%, as widely expected.
The move has weakened the Euro this afternoon, good news for anyone sending money to Italy, France, Spain and elsewhere in the Eurozone.
However, anyone needing to buy Euros for overseas property purchases or importing goods, should not get carried away. Analysts were expecting a minimum of 0.5% cut, so a bigger reduction in interest rates would have been much better news.
Typically, lower interest rates make a currency cheaper, because international investors move money to other areas, meaning demand is less so the price tends to fall.
UK interest rates are currently at a historic low of 1.5%, still below that of the Eurozone, so the Pound is still disadvantaged in this respect.
The next major currency news to look out for will be the minutes of the Bank of England’s last rate-setting meeting, which will give a broad outlook on the UK economy – and therefore the prospects for the ailing Pound.
Make sure you keep in touch with a specialist currency company if you are buying or selling any major currency – otherwise you may not get the best available exchange rate.
