EUR/GBP Is Likely To See Further Declines

The EUR/GBP currency pair has been experiencing an incredibly downward trend throughout the course of 2015. However, it doesn’t seem as though this trend is anywhere near over. Today, we’ll talk about why we can expect to see more declines in the currency pair and how binary options traders can turn the downward trends into profits.

eurgbp falls

Why The EUR/GBP Has Been Falling This Year

The single largest factor at play when it comes to the value of any currency is the economy that currency represents. Ultimately, the European economy hasn’t been doing very well recently. In fact, conditions became so poor in Europe that the ECB has already enacted economic stimulus in an attempt to stimulate growth. This stimulus drove the value of the currency down even further. Essentially, the ECB made the decision to reduce its interest rate. When interest is low, demand for the currency declines, leading to declining prices.

The EUR Is Set For Continued Declines

While we’ve already seen declines in the value of the Euro, it’s not likely that the value of the is going to rebound anytime soon. There are two reasons for this…

The European Economy – First and foremost, as mentioned above, the value of any currency is heavily dependent on the economic stability of the region that currency represents. Unfortunately, it doesn’t seem as though Europe’s economy is getting any better any time soon. With commodities on a continued decline the European economy is already struggling. That combined with the fact that the Chinese economy isn’t doing well and the fact that the United States Federal Reserve is planning on raising its interest rate in December makes it clear that it’s not likely that the European economy is going to improve anytime soon.

ECB Action – Because the European economy isn’t doing very well at the moment, economists are expecting the ECB to take further action. Mario Draghi has made several statements explaining that the ECB does have more room to move. One of the moves that economists are expecting the ECB to make is to drive its interest rate further into negative territory. Keeping in mind that when interest rates are low, demand for the currency attached falls as well, this is likely to drive the Euro down even further.