This article discusses the impact of the result of the German election and the factors that are likely to affect EUR exchange rates this week. In the table below you’ll see high to low GBP/EUR exchange rate movement when exchanging £200,000 to Euros during the last month.

Currency Pair% ChangeDifference on £200,000
GBPEUR5.3%€11,880

German Chancellor Angela Merkel wins fourth term but coalition talks required

All eyes were on last night’s German election results, with current Chancellor Angela Merkel, winning a fourth term.

Her widely anticipated victory came at a cost however, with some claiming her failure to claim a majority was a disaster for the current leader. Merkel herself admitted she and her party had hoped for a “better result” and the EUR suffered losses against both Sterling and the US Dollar as a result. She will now look to from a coalition, with the most likely alliance coming with The Social Democrats (SPD) but any policies or how this alliance would work are as yet unclear.

Bavarian elections

Her parties worst result in 70 years was somewhat overshadowed by the Nationalist ADF victory, who won its first seats in a parliamentary election.

This sparked dozens of protests across the country, with the EUR likely to come under pressure again today, as the EU’s leading economic powerhouse political future remains clouded in uncertainty. This result echoes many others across the globe over the past twelve months, with a rise in far-right movements a cause for concern amongst the established elite.

Personally, I would be extremely wary about leaving any short-term EUR sell positions unprotected following last night’s results, with the EUR unlikely to drive forward this week, at least until details of a working government become clear.

Key economic data releases this week

Unlike for the UK, the data releases in the Eurozone are fairly sparse this week.

The EUR is likely to be reactive to developments Germany & the UK and investor confidence in the Pound, wither positive or negative, is likely to inadvertently affect the value of the single currency.

With little data of note early this week, it is likely that Thursday’s Consumer & Industrial Confidence figures will hold additional weight with investors. With recent figures helping to boost the EUR to its current standing against both GBP and the USD, expect a drop back if they come in below last month’s reading.

Finally, on Friday Inflation data will likely impact the EUR value as we head into the weekend. Any move towards the ECB’s target of 2% is likely to benefit the EUR and could help stabilise the currency.

Thank you for reading my Euro currency report, if you have any questions about Euro exchange rates I would be more than happy to discuss them – you can contact me with any queries at mtv@currencies.co.uk.

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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.