The Euro is a little stronger this morning on the back of news Francois Fillon is the conservative candidate for the French Presidential elections next year. Occupying the centre right middle ground he has found great support and put into question the ease of National Front leader Marine Le Pen’s route to office. Marine Le Pen is seen as a more risky candidate as she threatens to pull France from the Euro, news on this event will be increasingly important to shaping the Euro in the future.
There is also the Italian Referendum due on the 4th December. The vote centres over PM Matteo Renzi’s Constitutional Reforms but is being seen in the light of recent anti-establishment votes in the US and UK. Matteo Renzi has stated he will resign if the vote goes against him which could open fresh wounds and concerns over Italian banks and debts. Uncertainty of government is something Italians are accustomed to – Italy has seen 63 governments since 1948. Whilst there is scope for snap elections that might help the 5 Star Movement or M5S gain power, M5S is not doing as well in polls as previously suggested. More likely is a no vote and then an interim coalition taking hold leading to further stagnation. Media reports of ‘Italexit’ and ‘Frexit’ are probably a little overdone at this stage but these events do raise important questions hence the weaker Euro.
A stronger Pound and weaker Euro has seen Pound to Euro rates hit a 2-month high recently. This is excellent news for any clients buying an overseas property as their purchase has now become 8% cheaper compared to the lows in October. The big question now is of course can this last and what should Euro buyers and sellers beware of in the coming weeks. Other issues in the Eurozone focus around the ECB (European Central Bank) meeting on the 8th December where investors are expecting an increase in the current QE (Quantitative Easing) program in place. This might weaken the Euro depending on the extent of any changes in policy. However I believe markets have already priced this expectation into the Euro and so do not expect any significant devaluation of the Euro at this time.
The latest forecasts appear to suggest a range of between 1.12 and 1.20 for the year end. It is clear that the recent good news for the UK economy and fresh concerns in the Eurozone have helped GBP/EUR avoid the shock of parity for now. I would be very cautious expecting this trend to extend too dramatically in the coming weeks and month. 2017 is looking to be a very uncertain year for the Pound so any clients with future GBP/EUR requirements buying and selling should I believe be making plans now.
Thank you for reading my Euro report this morning. If you have a currency requirement you would like to discuss, please call us today on 01494 725 353 or alternatively, email me at firstname.lastname@example.org.
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