The Euro has enjoyed some gains off the back of US non-farm figures on Friday. The run up the referendum will certainly be a volatile period for GBPEUR as polls have proven.

A window of opportunity for Euro sellers

The Euro gained over 2 cents against the US Dollar during Friday’s trading due to Non-Farm payroll figures which shocked the market at a 5-year low.
But it would appear that economic releases are having very little impact on the exchange for the time being as investors are focused on the EU referendum and the odds of a Brexit.

GBPEUR rates are trading at a month low edging towards 1.25 but if polls continue to show support for the Brexit camp, these rates could move into the low 1.20’s with only 2 weeks to go.

Euro to weaken after the Referendum?

I am of the opinion that the Euro is currently overvalued and is being held back from further weakness as a result of outstanding political and economic events. If the UK remain within the EU, the focus will move back to the economic releases which I believe would put a strain on the Euro.

Economic releases for the Eurozone have been mixed and despite Mario Draghi’s efforts to boost the economy, his QE programme appears to have had little impact as of yet, as inflation remains at -0.1%.

Mario Draghi remains confident that inflation will improve in the latter part of the year. But this entirely depends on how individual countries are performing and current economic data does not support a positive trend, we must also consider countries such as Greece that continue to put a strain on the economy which will hamper improvements going forward.

The rest of the week will be quiet for EU releases but live TV debates on the topic of the EU referendum will have an impact on Pound-Euro exchange rates. Euro sellers may wish to enjoy the recent gains running up to the referendum as a stay vote will most likely correlate to Sterling strength.

Thank you for reading my market report today, the EU referendum is having a noticeable impact on the exchange. Speak to one of our brokers today if you have a currency transfer requirement on 01494 725 353.


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