Will the Euro continue to remain so strong?

Selling opportunities for those holding Euros have remained strong ever since the Brexit vote back in June, and according to an increasing number of economists the exchange rates could become even more favourable. Previously we have highlighted Danske banks GBP/EUR 6 month forecast of 1.08, and over the weekend Credit Suisse have offered their own indications of between 1.10 – 1.0922 over the coming months via Christopher Hine.

He also added that Sterling’s slight recovery during August and the beginning of September was “corrective in nature” as will any other upticks in the Pounds value.

Potential downsides for the Euro moving forward

Despite such gains over the past few months there are a number of issues bubbling beneath the surface which could scupper these gains, should they materialise.

As many will have read in the news Germany’s biggest bank, Deutsche Bank has been on very shaky ground recently after it was issued a $14bn fine by the US Department of Justice (DoJ). The penalty is for its role in the subprime mortgage crisis which contributed towards the 2008 global financial crisis. These fines have been ongoing and the bank is also wresting with over 8000 legal cases worldwide whilst struggling to bring in cash.

Deutsche made a €7bn loss in 2015 and was one of the worst performing banks in the European Banking Authority stress test back in July. The importance of this situation is that Deutsche is larger than Lehman Brothers was when its bankruptcy triggered the 2008 financial crisis.

A bank bailout would not play into Angela Merkel’s hands, and with general elections next year in Germany and France, concerns over financial markets less favourable candidates/political parties winning elections could become an issue as we’re seeing in the US right now.

Both banking and political concerns could weigh on the Euro in future, so it’s recommendable to contact your broker if you’re planning a Euro repatriation, in order to both prepare the trade and outline potential price targets.

This week’s most prominent release is likely to be Thursday’s ECB Monetary Policy Meeting Accounts which is where the ECB will offer their rationale to their current monetary policy. Any indications of future policy changes can create big moves within exchange rates so contact your broker if you wish to plan around this release.

In markets this volatile exchange rates have the potential to change rapidly and with little warning. Speak to our brokers about a contract option to help mitigate losses on 01494 725 353.

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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.