This Euro report addresses the factors that could have an effect on Euro exchange rates over the coming weeks. The table below looks at the difference between the rate you would have achieved when purchasing £200,000.00 at the low and high levels during the past 3 weeks.
|Currency Pair||% Change||Difference on £200,000|
I’m not sure many would have marked Catalonia’s push for independence as the main concern for Euro holders at the start of 2017. But ever since the illegal vote back in October, Catalonian politics have without doubt brought a thick cloud of uncertainty over the Eurozone that will probably linger heavily over the single currency for the months ahead. Despite the fact that many of the pro-independence leaders are either behind bars or in exile, the push has continued to gather momentum.
No matter what outcome we wake up to tomorrow morning, I strongly believe the result will bring far more uncertainty than clarity going into 2018, leaving Euro holder’s intent on rolling the dice in a very perilous position. As far as I can see, the risks out way the rewards by far.
If there is a vote in favour of independence, the markets will most likely factor in the worst possible outcomes for Spain as a whole, which would draw the Euro’s value into doubt. When the initial vote was made back in October, the Euro lost nearly 2% against the pound. That’s a difference of 3,300 pounds on a €200,000 transfer. I wouldn’t be surprised to see similar movements tomorrow should the vote go the wrong way.
Equally, although I believe there is scope for some Euro strength should the vote go against independence, I worry the Spanish government would be faced with trying to control a deeply divided and particularly vocal region with a fragile economy at present. A Slowdown in economic activity for a sustained period of time could be expected. The markets may grow sceptical of the Euro as time goes on, depending on how well Madrid handle the situation.
The election is very much in the balance this morning, with 7 political parties pushing for seats in Catalonia’s new parliament. The majority of 135 seats will most likely be achieved via a governing coalition, given how divided the region is at present.
Voting will close at 7pm UK time this evening with real time polls throughout the day likely to prompt swings in the value of the single currency, particularly if the pro-independence parties gain momentum. If you are looking to buy Euros with Pounds, it may pay to get in touch with your account manager earlier in the day, to make sure you can capitalise on any spikes in your favour.
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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