This week on Tuesday, we will see Services and Manufacturing data from the Eurozone. If this continues in the same vein as the recent run of positive economic data we could see the Euro's strength increase. The ballot to confirm the coalition between the SPD and Merkel begins today, and has the potential to put pressure on EUR if the result isn't positive. The below table shows the difference in Euros you could have achieved when buying £200,000 during the high and low points of the last 30 days.

Currency Pair% ChangeDifference on £200,000
GBPEUR2.2%€5,050

The Euro has maintained its strength against both the Pound and the US Dollar since the turn of the year and this was demonstrated by yesterday’s Current Account figures as well as Construction Output data for December.

Tomorrow brings with it the latest Services as well as Manufacturing data from the Eurozone.  Both sets of data have shown signs of improvement over the last few months and this has been reflected in the value of the Euro so another strong release could see further improvements for the Euro.

The European Central Bank will be keeping close tabs on this data as well as Inflation data due to come out on Friday morning. The ECB has spoken previously about cutting their current QE programme so this week’s data could influence on what the ECB does going forward.

Where next for Germany?

Where next for Germany?

A postal ballot will begin today in Germany with the Social Democratic Party being asked whether the party should go ahead with an agreement put in place to continue their arrangement with Angela Merkel’s Christian Democratic Union party. A total of 464,000 will be asked for their opinion and Andrea Nahles a senior official for the SPD party has said ‘I don’t have a plan B’. 

It is highly likely that the deal will remain in place but if not this could cause a huge problem for Germany and potentially the single currency. The SPD has been rather unsettled since the deal was struck and some have even suggested that Merkel’s party should drop the coalition plan and opt instead for a minority government.

The result of the postal ballot is due to take place on 4th March so make sure you keep a close eye out on what will happen during the next fortnight.

When Merkel won last September it was the worst result since Germany became a federal republic back in 1949. So far the Euro has not been too negatively affected by the political problems in Germany but with the vote due to take place in the next couple of weeks this could pose a risk to the strength of the Euro.  Therefore, if you’re considering selling Euros it may be worth taking advantage of current exchange rates.

For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.

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