This report will examine the factors that could affect exchange rates in the short to medium term to help you stay informed if you need to make a currency transfer. The table below shows the difference you would have received when buying £200,000 at the high compared to the low for the previous 3 weeks.

Currency Pair% ChangeDifference on £200,000
GBPEUR1%€2,200
US trade tensions affecting Euro growth?

What kind of threat does the Catalonian crisis hold for the Euro?

Euro holders have found themselves in a difficult position following last week’s vote in Catalonia. As three Separatist parties united to win an overall majority within Catalonia’s new parliament, a thick cloud of uncertainty now looms over the Euro with investors likely to begin factoring in the worst possible outcomes for the Spanish economy and indeed the Eurozone as a whole.

It is worth noting that this rationalistic feud dates over hundreds of years and it comes as no surprise that the vote has done very little to settle the jitters.

With self-exiled Catalan leader Puigdemont and Prime Minister Rajoy already at loggerheads, my view is the Catalonian crisis is likely to be a slow burner that will cap the Euro’s value in the long run.

Given all 3 of the parties that are to form the coalition each have their own view on what an independent Catalonia should look like, it is a fair assumption that there are a fair few hurdles ahead before we get any clear view on just how Spain will handle this. If and when they can form some kind of game plan, much will be made of the talks between Barcelona and Madrid.

The timing is particularly relevant however, given there is an Italian general election scheduled for March. If we see a nationalistic drive there, it could give momentum to the process in Spain, at which point the Euro really will be in for a rock ride.

German coalition talks main culprit for immediate Euro uncertainty

On the other hand, the German coalition talks could be seen as the main culprit for Euro uncertainty recently as Chancellor Merkel’s conservatives have continued to struggle to gain commitment from the Social Democrats to maintain their position at the top. Investor confidence has wavered ever so slightly as Merkel is a favourite of the markets so when her position comes into doubt, so does the Euro.

Last week the conservatives tried to tempt their counterparts with a terms surrounding health care and a clear commitment to tackle unemployment but their efforts were pushed back as key differences on tax issues are yet to be agreed upon. If no resolution is found before the 12th of Jan, “explorationary talks” will commence paving the way for new coalition talks which could be potentially damaging for the Euro.

Thank you for reading my Euro currency report, if you have any questions about Euro exchange rates I would be more than happy to discuss them – you can contact me with any queries 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.