This Euro report will examine the factors that could affect exchange rates in the coming weeks to help you stay informed if you need to make a currency transfer. The table below shows the difference you would have received when buying £200,000 at the high compared to the low yesterday.

Currency Pair% ChangeDifference on £200,000
GBPEUR0.5%€1240
Where next for Germany?

Germany Faces New Elections – Euro Uncertainty

The Euro has come under additional pressure this week following a collapse in talks in Germany where a coalition government is still yet to be formed. The pro-business Free Democratic Party (FDP) have walked out of the negotiations after no agreement could be reached which is now putting substantial pressure on Chancellor Angela Merkel.

The issue of migration appears to be the main stumbling block to form a government with different parties wanting different policies. The so called Jamaica coalition now appears doomed to fail. It raises the prospect that there could now be new elections in Germany creating additional volatility for Euro exchange rates in the months to come.

This path is starting to look quite likely considering the old partner of choice the Social Democrats (which formed the Grand Coalition) have again ruled out working together. The only alternative would be for Angela Merkel to form a minority government but this seems less likely and she is not keen to do this.

If it comes to new elections, there could be a long period of uncertainty for the Euro. With a long political procedure to follow in Germany, it would probably be spring 2018 before an election could take place to revisit the September vote. Angela Merkel met with the German President yesterday to explain the position so expect more volatility for the Euro as events unfold. He appears to be pushing for continued talks between the parties so there could be more twists and turns.

Catalonia Uncertainty for Euro

The Catalonian crisis continues to create uncertainty in the region and hence the Euro ahead of an election 21st December. In the meantime a European Arrest Warrant has been issued by the Spanish courts summoning deposed Catalonian leader Carles Puigemont for rebellion amidst other charges.

Catalonia comprises around a fifth of Spanish Gross Domestic Product and the political uncertainty is having a negative impact on Spanish output which is negative for the Euro.

To date the Catalonian region has seen unemployment rise by 3.67% representing the biggest rise in any of the 17 regions. In a sign of other potential problems it has been reported that hotel occupancy rates in Catalonia have fallen by around 30% since the October referendum whilst over 2000 businesses have left the region including two of its biggest banks.

A court date of 4th December has been set for judges in Belgium to decide whether Carles Puidgemont will be returned to Spain. The crisis is expected to last for months before anything is resolved and this is likely to hamper the Euro going forward.

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 on 01494 725 353 or email me here.

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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.