As the week draws to a close, the postal vote from members of the Christian Democratic Party in Germany and the election in Italy have the potential to cause volatility for the Euro next week. The table below shows the difference in Euros you could have achieved when buying £200,000.00 during the high and low points of the past 5 months.

Currency Pair% ChangeDifference on £200,000
GBPEUR4%€8,800 EUR

Italian elections and German unity key for investor confidence

The social democratic party’s postal vote results will be announced on Sunday afternoon with Euro holders hoping it will show a unanimous backing to renew the Grand Coalition with the Christian Democratic Party. The vote in favour should once again place Chancellor Merkel, a market favourite, at the top of the pile. The show of unity should draw investor confidence to the single currency, increasing its value. That is of course if the election in Italy this weekend brings the clarity the market needs.

The Italian setup generally favours a coalition government with a linkup between the 2 centre-right parties the Northern League and Forza Italia the most likely to win a majority. Both have previously shown a strong commitment to the European cause so should this outcome occur I would expect immediate euro strength making it more expensive to buy. However, if we end up with a hung parliament and the coalition between the 2 does not get enough seats, it will bring added importance to the position of the Five Star Movement party who will no doubt be pushing for a repeat election. This could lead to a prolonged level of uncertainty which is always badly received by the currency markets, potentially leaving those looking to sell euros in a far weaker position.

Given we are nearer the strongest levels to sell euros since the start of the year, it may pay to consider making a move before the week comes to an end to limit your exposure to next week’s volatility.

Little movement expected on Eurozone Gross Domestic Product Figures

Eastern European politics bring question marks over EU lawmaker’s standards

Yesterday, the European Parliament voted heavily in favour of taking punitive action against the Ruling nationalist Polish party the PiS amid concerns they have not been abiding the Europeans democratic directives, having made multiple changes to the judiciary system and state media rulings since they took over in 2015.

Hungary, a major trade partner to Poland, has already stated it’s intensions to back their corner against the European commission, with other Eastern European countries likely to follow suit.

At a time when EU Law-making supremacy is heavily in the spotlight courtesy of the ongoing Brexit talks, this call for punishment may well result in further division within the European block.

It goes without saying the timing is potentially very hazardous for Jean-Claude Juncker, European commission President, who is due to meet Poland’s Prime Minister Morawiecki on the 8th of March. There is a good chance the markets are following this story from a far as any cracks in EU unity is likely to way investor confidence away from the Euro making it cheaper to buy.

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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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.