The Italian Referendum did not fail to add to the Eurozone’s list of problems and gave Pound to Euro exchange rates a slight boost touching 1.20 for the first time since June.
Many clients have been holding out for the Pound to find some form and over the past few weeks we have seen a slight boost for Sterling exchange rates against most major currencies.
Italian Prime Minister Matteo Renzi has now resigned, just as he had threatened to do so if he suffered defeat. This has thrown up more problems for Italy, where economic uncertainty is already causing issues following reports that 8 Italian banks are on the verge of collapse.
The result of the Referendum and the subsequent actions that Italy’s banks now face are not the only problems the Eurozone face, with Matteo Renzi now out of the picture, the prospect of another Brexit has suddenly come to light.
Italy’s far-right political party, the 5-star movement, is gaining momentum in Italy and have promised a Referendum on EU membership, another potential headache for the EU to deal with. This trend is not an isolated one, if Brexit and Trump taught the markets anything, polls have not been entirely representative of results this year. Marine Le Pen of the French National Front is not expected to make the second round of the French elections, but similar comments have been echoed in context to Brexit and Donald Trump.
The Dutch elections next year are also expected to throw out some surprises, Geert Wilders, leader of the Party for Freedom is currently storming the polls and has promised a quick referendum on EU access if elected.
The combination of political and economic uncertainty will not help Euro exchange rates, hence the fact Pound to Euro exchange rates are almost 10 cents higher than a number of weeks ago. To put this into monetary terms, buying €100,000 with Pounds is now almost £8,000 cheaper than it would have been just over a month ago.
Is now the best time to buy Euros?
Clients looking to convert Pounds to Euros should not become too complacent, especially given the Supreme Court appeal that begun this morning. Pound to Euro exchange rates have already fallen one and a half cent since the beginning of the trading day, and could be set for further losses if Theresa May wins the right to trigger Article 50 without Parliamentary consent. The outcome of the appeal will not be heard until January, denting market confidence in the Pound for the remainder of the year.
Over in New Zealand we have also had another surprise resignation, as John Key who has held the position of Prime Minister since 2006 stepped down last night. He stated he wanted to spend more time with his family as the main reason behind it. This has weakened the New Zealand Dollar ever so slightly, with the Pound pushing to break through the 1.80 barrier in early morning trading.
With market volatility expected this week, if you are in the position where you may need to carry out an exchange, either now or in the near future, then it is well worth getting in contact with your account manager here at Foreign Currency Direct. Your account manager can help guide you through the current market, which is extremely difficult to read due to so much going on around the world at present!