The Economic slowdown in Germany, along with Italy, Spain and Greece crawling along, has seen the euro continue to struggle against all major currencies. Weak European data ended hopes of the Fiber (EUR/USD) pair picking up off the back of whispers that the US economy’s growth is slowing down. The pair has been testing the interbank resistance level of 1.13 for many months now.
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The EU’s biggest problem is that it seems to be economically reliant on Germany to keep the euro afloat. European powerhouse, Germany has plenty of world-class companies but, are unlike the the US or UK who has new companies integrating and adapting into the global market. Germany is also subject to the pressure of tariffs and lack of demand on exports. This is partly shown by the downturn in its manufacturing hub which is its main source of revenue, as Friday’s figures for the manufacturing Purchasing Manager's Index (PMI) plunged to 44.7 in March 2019 from 47.6 in the previous month and well below market expectations of 48.
We could potentially see movement in the euro from news at 9:00am this morning of the epectations from the Institute for Economic Research (IFO) if they differ from the predicted 94.4, where anything under 100 is considered a negative/bearish turn in the market. These figures are an early indicator of current conditions and business expectations for the next six months, which could be a key period as the UK leaves the EU. Based on the Economic data coming out from Europe we could be seeing some weakness for EUR through this week.
The European Central Bank (ECB) President Mario Draghi is due to speak on Wednesday to steadfast fears that the EU’s economy amidst the ongoing Brexit crisis and European sluggishness.
Chancellor Philip Hammond’s response to the march through the streets of London was, a second EU referendum is a ‘perfectly coherent proposition'. If we see the possibility of a second referendum increase in the coming week, it could result in some volatility in the pound to euro interbank exchange rate.
The march on Saturday has put wind in the sail for those against the withdrawal agreement currently trying to keep the UK within the Eu by either revoking Article 50 altogether or by trying to push for a softer Brexit. Either of which are in complete contrast to the original referendum.
It began with Speaker of the House of Common John Bercow refusing to allow a repeat vote of the exact same Brexit bill. Things changed a little when PM Theresa May asked for a short extension of Article 50 to June 30th pending her deal be past, instead of a longer one. She wanted to use the time to try and pass her Brexit deal one last time. Due to the constant rejection by Parliament, this has sparked a debate about what the MP’s actually want. The politics will be cause for movement in the markets this week, this week pound to euro rates could be very volatile.
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