With reports of progress in the Italian Coalition Government talks, this Euro forecast looks ahead at what this could mean for Euro exchange rates. In the table below you can find high to low GBP/EUR exchange rate movement during the last month and the difference when exchanging £200,000 to Euros.

Currency Pair% ChangeDifference on £200,000
GBPEUR3.10%€6,920 EUR
Spanish political turmoil adds to Euro woes

The Italian coalition talks have started to progress with a deal between political parties 5 Star Movement and League. They have agreed on the speakers for both the lower and upper house which mean they can now begin talks on policies moving forwards.   

There is still an incredibly long way to go and for now the far-right League and anti-establishment 5 Star Movement look some way from the desired Italian EU Referendum which should mean Euro risk doesn’t appear just yet.

However there has always been a major chance in Italy after the extreme austerity that the country would vote against the EU and in this election, there wasn’t quite enough support for that to be the case without coalition talks. 

Many analysts now believe that talks between these two parties only really present a short-term solution and following on there is likely to be another election after Summer. Both these parties are critical of the European Union and could well start to push back on some of the debt and bureaucracy issues that are faced by Italy.

Potential Risks for the European Union

One of the other concerns for the European Union with these two parties is pro-Russian supporters. In a time where the European Union are expelling Russian diplomats and pursuing further sanctions the EU’s third largest economy could soon be voting against these sanctions in the European Parliament.

Just for now until there are further developments the Euro shouldn’t suffer, however thinking back to the Greek bailouts investors in the Euro became very nervous when EU countries move off the track. Over the next few months the Italian political scene could start to change becoming increasingly risky, especially if you consider the 5 Star Movement have never been in power.

In my opinion if these talks start to move along this could be the catalyst that sees the GBP/EUR rate move back towards the 1.20 level if not higher. As the UK leaves the single market, the hole left in EU’s budget does not need to be stretched by extreme policy changes in Italy.

If you do have a requirement this year to sell or buy Euros, make sure you’re in touch with your broker as the EU may not be far from significant uncertainty.You can call our trading floor on 0044 1494 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.