The euro is struggling to answer some of the questions posed to it in recent years. Namely, will the political direction of the Eurozone drift further off its more centrist and progressive roots? The outcome from the European elections suggests that yes, this is proving to be the case although the slide is not quite as bad as was predicted.
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The economic outlook is also shaky within the Eurozone, with rising global uncertainties owing to the trade wars that are presenting unwanted barriers to the single bloc’s haphazard economic progress. Consequently, the euro has been weaker this week and there might be more pitfalls ahead.
Italy has been in the spotlight this week following Matteo Salvini’s strong run in the European elections, capturing 34% of the Italian vote. His anti-EU and immigration agenda has captured much support. Utilising his Facebook live posts, Salvini is openly threatening to reject Brussel’s requests over Italian debt. There is the potential for euro weakness if this escalates further, as the EU seek to rein in Italian spending.
We have this week been very close to the 1.1306 lows on the interbank rate seen on the 24th May, which was the best rate since 17th January 2019. In terms of the outlook on this pairing, it does seem reasonable to expect the pound is going to struggle to make any large gains against the euro, even if the euro has been weaker. This is because the market appears to feel that the political issues in the UK will for now outweigh those in the Eurozone.
However, the path ahead for the euro is also looking fraught with concerns and it has lost value against most currencies, except for sterling. As mentioned above, political concerns seem to me to be likely to become a more and more important theme.
Greece has also hit the headlines with Alexis Tsipras, the Greek PM calling a snap general election following his poor showing in the European elections.
It seems that these European elections might have opened the door with further volatility for the euro ahead. Therefore, clients hoping to buy or sell euros with pounds seeking a quick return to the highs or lows of 2019 so far, might wish to think carefully about what lies ahead.
If you are planning a transfer soon, or in the future, speak to our team about the latest outlook and how we can develop a relevant strategy to help minimise the risk and exposure to the currency markets.
Jonathan Watson as ever, ensures a smooth, reliable and trustworthy transaction for the second time of service! Delightful to deal with – efficiency personified. Thank you Jonathan. Would recommend highly – 5Star.
Excellent initial guidance, and during the transaction regular communication and updates. Dealing with Jonathan Watson was a pleasure. Very reassuring.
Jonathan Watson provided very helpful advice throughout the process, as well as immediate responses to our inquiries. He and his team were patient and thoroughly professional, which helped us through some stressful moments following the sale of our property in France.