Euro before Inflation numbers on Monday

Monday sees EU inflation numbers which are keenly awaited and could create volatility for the Euro. The European Central Bank has been battling with weak growth and persistently low inflation in recent years and a weak number here could result in Euro weakness. There has been a lot of pressure for the ECB to take further action which it failed to make at the last meeting. Next Thursday’s ECB meeting could see a change of stance especially if inflation fares badly next week.

A small adjustment to Quantitative Easing via an extension does appear to be on the horizon either at next week’s meeting or in December. This would be Euro negative in the short term.

Italian politics create uncertainty for Euro

Another Italian political party coming to the forefront are the Northern League which is gaining ground whilst pushing for an abandonment of the Euro and return to the Lira. The right winged party is challenging Silvia Berlusconi’s party and successfully winning voters. This could even ultimately end in a right wing coalition between the two parties after the next elections.

This is all extremely topical now as the Italian referendum on constitutional reform would most likely result in new leadership. Italy’s Prime Minister Matteo Renzi has suggested he would quit if he loses the referendum. This would of course mean the rise of the right in Italy which is against many EU values and would be a major blow not only for the EU but also the Euro amidst further political uncertainty. The referendum will be held on the 4th December and the vote really could go either way. A ‘No’ vote would create financial volatility in the Eurozone and would pave the way forward for huge change in Italy and potentially the EU as a whole when considering the French and German elections next year.

With so many political issues on the continent these are all likely to have a huge impact on Euro Exchange Rates. Be sure to be in contact with your account manager whether buying or selling to maximise on the rate movements as they happen.

Politics continue to drive GBP EUR exchange rates and clients could benefit from being kept updated on further advancements. You can call our trading floor today on 01494 725 353.

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