This Euro report will address 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 month.

Currency Pair% ChangeDifference on £200,000
GBPEUR3.30%€7,250
What next for the single currency?

Catalan impact on the Euro going forward?

Following the calls for independence, a number of corporations have announced plans to move their HQs from Catalonia to other areas of Spain. The EU has said it will not recognise an independent Catalonia and stocks in Spain have swung widely on the developing story.

Personally, I don’t expect an independent state to be formed, I think that Spain and the wider EU will frankly not allow it in fears that regions in Germany, Poland and other members would follow suit. Simply put, it could fundamentally put the EU at risk of falling apart in a similar way when Greek bailouts were centre stage a few years ago.

I think it is more likely that a middle ground will be found with more self-management within the region. This has increasingly become the view of most following the news that the Calalan leader, Carles Puigdemont, would not be declaring independence and instead said he would allow negotiations.

How will this impact the Euro?

I see the changing likelihood having a direct impact on the value of the Euro but within a relatively small range, perhaps a cent or two. Remembering that even if they were to leave Spain, they would not leave the Euro so there will be very little impact on the overall performance of the EU as a whole. What it has done is weakened the Euro meaning that if the risks of separation evaporate expect the Euro to gain in value.

Will the ECB taper in 2017?

Outside of the political news, recent EU data has continued to perform well. Business investment in the euro area recently rose sharply and is now at a pre-2008 crisis level, plus Euro area job creation in the manufacturing sector hit a record high. This has all pointed towards an expectation that the European Central Bank (ECB) could start tapering their QE program before the end of the year. This is the un-winding of their investments that they are making into the economy to stimulate growth. Currently this sits at €60 billion of investment a month and commentary from Mario Draghi recently has suggested it is still on the table before the year end.

Going forward, economic data is released next week and includes Consumer Price Index on Tuesday and the next European Council Meeting which starts next Thursday. Generally, I expect data from the EU to continue to remain positive, strengthening its value however Spanish news could break at any point and is highly likely to have a detrimental impact on the Euro’s value. Personally, I see the value of the Euro gaining over the coming 10 days.

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 by emailing HSE@currencies.co.uk.

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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.