Amid political uncertainty in the EU powerhouse Germany, the EU are due to meet this week and discuss the ongoing budget plans up until 2027 on Friday. This report discusses how these factors could affect EUR in the coming months. The table below shows the difference in Euros you could have achieved when buying £200,000.00 during the high and low points of the past year.

Currency Pair% ChangeDifference on £200,000
GBPEUR3.2%€7253.57

Will political uncertainty scupper the Euro's value moving forward?

The Euro has been one of the best performing currencies this year as many of our regular readers will be aware.

Just yesterday a European Central Bank (ECB) policymaker (Vitas Vasiliauskas) stated that the stronger Euro is a natural reaction to the trading bloc’s strong economic performance, and not a by-product of the ECB’s monetary policy.

The ECB’s quantitative easing program began three-years ago and seems to have run its course now, but I don’t believe the Eurozone’s troubles are over as we’re noticing a clear pattern throughout European politics which could result in a weaker Euro.

Angela Merkel still isn't a sure bet!

Earlier this week the AfD (Alternative for Germany) party became the second most popular party in Germany. This is the first time it’s been this popular and very unusual considering its far-right political stance, which isn’t common in Germany. The AfD now has 16% support according to Bild newspaper and comes at an awkward time for Germany, as a number of other parties are currently trying to form a coalition to ensure the AfD don’t come into power and Merkel remains Chancellor.

Issues such as these aren’t confined to Germany as the Five Star Movement (M5C) in Italy is gaining support ahead of the election next month on the 4th of March. The EU will be very keen to ensure no other members leave in case it causes a domino effect, and they will especially be concerned if another key member opts to leave the EU. I don’t think we’ve heard the end of this and it’s something I think Euro sellers should consider, as it holds the potential for the Euro to weaken.

 

Key data releases that could result in Euro fluctuations

Yesterday it was reported that former senior EU officials have written a letter to EU leaders suggesting the EU should raise taxes on fossil fuels, to help meet goals on climate change and plug the budget gap once Britain leaves the EU.

European leaders will be discussing the bloc’s long term budget from 2021 to 2027 at a summit on Friday, and there could be comments that move the markets both on Friday and in the lead-up depending on what’s said, like the comments we saw yesterday for example.

Aside from this summit and the EU’s budget being in focus, I think that inflation data out of the EU at 10am on Friday could also have the potential to move Euro exchange rates. Do feel free to get in touch if you wish to plan around this news release, and please note that expectations are for a 1.3% increase Year on Year.

For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here

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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.