Euro uncertain on ECB expectations

Eurozone Consumer Price Index (CPI) inflation numbers are released this morning at 10:00 and could create some volatility for the Euro today. Inflation in the EU is highly topical right now after almost three years of weak growth and very low inflation which are still not showing any real signs of improvement. EU inflation is expected to notch up to 0.6% in November from 0.5% the previous month.

Any weakening in the numbers however could pave the way forward for ECB President Mario Draghi to extend the current programme of Quantitative Easing which would be Euro negative.

Although the European Central Bank will meet next in December there is a speech today from Mario Draghi and he will inevitably reflect on the inflation data so expect volatility for the Euro.

During another speech earlier this week he made clear that Britain “first and foremost” will feel the pain of Brexit and highlighted issues of Euro area sovereignty such as payments and clearing systems. He also urged the British government to reveal Brexit plans stating that he believes it’s currently impossible to say what impact Brexit will have on the City of London or Europe due to a lack of information.

Italian Referendum fast approaching!

The eagerly awaited Italian Referendum on structural reform is now imminent with the date set for this Sunday. Monday morning could be very interesting for the Euro so those clients with a Euro currency requirement would be wise to speak with your account manager this week to weigh up your options. Italian Prime Minister Matteo Renzi has indicated that if he loses the Referendum then he will stand down. The vote really could go either way. If he is forced to resign then it will pave the way for the rise of the right in Italy whilst creating a headache for Brussels. It could lead to a domino effect in other European economies but in particular it opens up potential political outcomes next year with the French, German and Dutch elections. Clients looking to buy Euros could see a sharp improvement in the rates available if the vote goes against the Prime Minister.

With the Italian Referendum and Supreme Court hearing over Brexit terms just 24 hours apart, clients buying or selling the Euro could benefit from getting in touch with your allocated broker. Alternatively, you can email me at jll@currencies.co.uk if youd like to know more on how these two key events could impact your currency requirement.

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