A survey released yesterday from IFO showed a deterioration in economic and business confidence in Germany, suggesting that it may be heading towards more normal levels of Growth, which is concerning with Germany being Europe’s largest economy. The index was released at 101.8 in June, the lowest level noted in over a year, however the Euro still managed to strengthen slightly against the Pound during yesterday’s trading. The table below shows the difference in potential returns you could have made when selling £200,000.00 during the high and low points during the past month.
|Currency Pair||% Change||Difference on £200,000|
However, this could start to cause problems for the Euro, especially if the trade war sparked by the US and Donald Trump continues to escalate, as this was the largest contributing factor to the fall in sentiment.
So far this year German economic data has been showing signs of a slowdown in the economy, including weak industrial and exports figures for the first four months of 2018. As this latest business confidence was taken before the recent German migration row between its coalition Government, things could be set to get worse in the months ahead, and would likely weigh on the value of the Euro.
Likewise, if the confrontation between the US and China continue, this too would likely be extremely damaging for the Euro as Germany relies heavily on the two largest economies in the world. Clients with a short to medium term Euro transfer to make could benefit from detailing any requirements to your account manager here, in order for us to monitor the markets and capitalise on any spikes as they happen.
There are a number of key European data releases of note this week, including the European Central Bank’s Economic Bulletin which is released on Wednesday at 9am. This particular bulletin should provide a detailed analysis of economic and monetary developments in Europe, and considering the recent concerns surrounding the strength of the European economy, investors will be keenly watching for positive hints to boost the value of the Euro.
Probably the most significant event this week for GBP/EUR rates will be the European Council meeting which will start on Thursday and continue through to Friday.
The topics which are expected to be covered include migration, security and defence, economic and financial concerns, and will be followed by discussions on the progress of Brexit talks. As such, I would expect GBP/EUR rates to remain volatile towards the end of the week and clients should keep a close eye on developments from this Summit, or alternatively get in touch and let us watch the markets for you. 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.