The Euro’s value has continued to weaken through 2019 so far, with the EUR dropping against all currency pairs within the G10 group so far.
|Currency Pair||% Change in 1 month||Difference on £200,000|
Interestingly this pattern coincides with the end of the EU’s asset purchasing programme, which helped the economic group recover from the financial crisis of 10-years ago now.
It will be interesting to see how the Euro fares without this financial assistance, especially as many financial commentators had previously adopted a bullish stance on the Euro throughout 2019.
The reasons for the weakening Euro are being attributed to slowing euro-area growth, stalling inflation and a number of lingering political risks which have been well covered within our daily reports.
Analysts had predicted a strong year for the Euro during 2019, with the European Central Bank expected to follow the US Fed’s footsteps and hike interest rates for the first time in 8-years. Since the New Year though, Germany’s economy has been showing signs of a slowdown as demand for their goods reduces globally but particularly from China. Higher German Bond yields were also expected to be issued by their Government (Bunds, our equivalent of Gilts), although the reverse has actually occurred.
The hopes of a rate hike from the ECB are now fading, and personally I would expect to see a further drop in the Euro's value if Germany does drop into negative economic output this year.
Although politics remains the main influence for EUR exchange rates at the moment, it’s worth noting that today there will be a number of releases that could move the markets. There will be data covering the Services and the Manufacturing sectors this morning, and then the ECB will release its interest rate decision at 12.45pm this afternoon. No changes are expected although any allusions to amendments to the ECB’s plan of hiking rates after the summer this year could move EUR exchange rates.
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