The euro is suffering against the majority of currencies at present. The UK’s concerns surrounding politics and Brexit are currently outweighing the economic problems from the Eurozone however, which highlights how bad the situation is over here.

Currency Pair% Change (Month)Difference on £200,000
GBPEUR4.02%€9,100

Against the US dollar the euro sits close to a two year low. Trump is currently waging trade wars across the globe and the most concerning target for the Eurozone is the automotive industry.

Germany is the engine room of the bloc and its primary export is motor vehicles. A huge amount of the business goes to the US and with Trump threatening significant tariffs on vehicles, this has the potential to hit the Eurozone hard. With the eurozone under threat investors are losing confidence in the euro and are choosing safe haven investments, the US dollar seems to be the destination of choice.

Italian debt causes issue with European Union

Italian debt

The European Commission is threatening disciplinary procedures for Italy this week due to the country’s failure to reign in their debt. They propose a fine of €3.5bln, although is seems quite obvious this will add to the problem.

This could reignite the previous quarrelling between Brussels and Rome over debt which caused significant market volatility in late 2018.

Italian Deputy Prime Minister Matteo Salvini has stated he will push back against Brussels following impressive results in the European election, he has the upper hand in the populist coalition after a resounding victory in the elections.

This situation should be watched closely if you have a requirement involving the euro as this has the potential to move markets, although I am afraid to say UK politics and Brexit will continue to be the key driver on GBP/EUR exchange rates.

Harmonized Index of Consumer Prices, Germany: Friday £31st May

Harmonized Index of Consumer Prices (HICP) is essentially a measure of inflation. It is used to define and assess price stability in Germany. There is expected to be a decline to 1.5%, down from last year's 2.1%, which does have the potential to weaken the euro.

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