As mentioned in the sterling section of this report, today is a key day for euro exchange rates against the pound as Prime Minister Theresa May heads top Brussels for further talks with Jean-Claude Junker.
The outcome of these talks will be key to how the euro performs over the course of the trading day and the rest of the week.
Investors and speculators alike appear to be confident of a positive outcome as the pound gained value against the euro in trading yesterday.
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The euro is actually performing fairly badly against a number of major currencies this year and had it not been for the uncertainty of Brexit holding the pound back, I actually feel that GBP/EUR exchange rate would be much higher than it currently is.
As an example, EUR/USD is close to the lowest it has been since June 2017 and also close to the lowest it has been against the Australian dollar in 2019.
There are still large concerns over the health of a number of economies within the Eurozone, with weak growth figures posted by the nations within the single currency.
One of the key concerns is Germany, the largest economy within the Eurozone. So far, we have seen German growth figures dropping, and there could be more to come.
The key factors surrounding this will be the German motor industry. With signs of this sector already dropping off it could be the straw that breaks the camel's back.
Donald Trump has recently threatened to put a 25% tariff on imported cars which could be really damaging to the German economy and could be enough to push Germany into recession, which would be seen as negative for euro exchange rates.
Donald Trump is citing national security as the reasoning behind the tariffs, but when you bear in mind that the EU has their own 25% tariff on U.S cars imported into europe there may have to be a deal done somewhere.
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