Euro uncertain as Dutch Elections approach

Just as the UK has to tackle Brexit, so too does the European Union. Cracks were emerging at the end of 2016 as to how the structure of the negotiations will take place with battles between MEP’s and representatives of the European council. This year sees three political elections in Europe starting with the Netherlands on 15th March 2017. The latest polls put Geert Wilder’s Eurosceptic Party for Freedom (PVV) marginally in the lead and so this in my view would be hugely symbolic should he win and set the tone for the following European elections.

In France the first round of elections takes place 23rd April 2017. Should Marine Le Pen win then there has been much talk of a referendum on the Euro which would result in a major crisis for the Euro. The general consensus is that she will perform well in the first round but will lose in the second round to a centrist opponent which is starting to look considerably like conservative Francois Fillon. However as 2016 showed us – Nothing can be ruled out.

Germany follows later in the year and whilst Angela Merkel is widely expected to maintain the status quo, her open door immigration policy and its repercussions could ultimately be her downfall.

Euro faces uphill battle with economic and political uncertainty

The combination of Brexit, a Trump presidency, the migration crisis, terrorism in the EU, a weak overall EU economy, the Italian banking crisis and the rise of the right politically across EU states aren’t boding well for Europe right now. The single currency is likely to be under added pressure as developments unfold starting with those Dutch elections.

We start the year with manufacturing data from the Purchasing Managers Index whilst Services data is released tomorrow. Thursday sees Producer Price inflation numbers for November which could create some volatility considering inflation is so topical at the moment. It will be interesting to see whether inflation starts to rise in the Eurozone in 2017 or whether the EU sees yet another poor year with very low inflation and weak growth.

The European elections could create volatility for the Euro in light of Brexit, and those with a Euro requirement may benefit from talking through your needs with one of our experts. Call today on 01494 725 353 or email me here if you have any questions.

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