The euro has lost plenty of support of late as investors continue to shy away from the single currency.
The almost unchallenged upturn for the single currency we witnessed for much of last year and even before now seems like a distant memory. With key Eurozone economies posting uninspiring economic figures of late, the EUR could be set for a tough run against its major counterparts over the coming months.
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Euro sellers will be looking at the current slide with trepidation but for the time being at least, it seems as though the single currency is still holding its own against GBP. This is only likely to continue whilst there is so much uncertainty surrounding the UK economy ahead of Brexit, due to the fact almost two years into negotiations and we are still no closer to understanding what form Brexit will take and when it will actually happen.
If Theresa May somehow does manage to push through the delayed second vote on her Brexit deal, or key Eurozone economies such as Germany, France or Italy continue to show economic contraction, it is likely that the EUR will suffer as a result.
The single currency remains overvalued against sterling in my opinion and unless EUR sellers are pinning all the hopes on the UK exiting the EU without a deal, then I have major reservations as to whether the euro can return to its post Brexit highs.
This leads me to the conclusion that euro sellers have far much more to lose than they can gain, if we assume that the UK will not leave the EU without a deal.
Whilst the possibility of a possible extension to Article 50 grows, EUR sellers may avoid any further heavy losses in the short-term but leaving any currency positions exposed to such uncertain and uncontrollable variables is a risky strategy.
When the dust settles on what has been a long and arduous Brexit process, I expect euro sellers to look back on the current levels favourably.
Any clients with a EUR currency requirement this week, should be keeping a close eye on Friday’s official Unemployment rate, with any figure above the expected 7.9% likely to heap further pressure on the currently fragile euro. Prior to this, Industrial & Consumer Confidence figures on Wednesday are also likely to influence the value of the euro, and based on the current economic downturn inside the Eurozone, may well make for grim reading.
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