Germany has been showing resilience of late and is set to put fears to bed that the economy is struggling and potentially in a recession. IFO Data for Germany is set to be released this week. The German business sentiment index for April is a key release in the week ahead for the single currency. It is scheduled for Wednesday at 9.00 BST. The Business Climate Index is forecast to rise to 99.9 from 99.6 previously. Current Conditions are forecast to rise to 108.7 from 103.8. Expectations are expected to fall to 94.7 from 95.6. Any deviations from the expected data forecast could cause movements on the Euro as it expects to show the idea of Germany recovering from is struggling last few months.
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The IFO is often viewed as a leading index for the wider economy so if it rises strongly it could be taken as a positive sign for the euro and can lead to gains for the currency.
Another key sentiment gauge for the Eurozone is official Eurozone consumer confidence in April, was released on Monday. The forecast was showing a balance of -7 from -7.2 previously. The balance reflects the balance of positive to negative survey responses. The markets yesterday had a positive reaction to the slight reduction in negative sentiment from the Eurozone. It is often an accurate leading indicator of economic growth. As we have seen the pound to euro drop in the hours of yesterday to levels only touched briefly in the past two months. So, if you are looking to sell euros, I would recommend getting in touch with us to stratify a way forward.
The overall average EU and euro-area government debt to GDP stands at 86.8% and data out on this morning will provide an update of that figure. Debt remains a serious problem, especially for members such as Greece and Italy, as well as having their budgets being under heavy fire. It can be a serious drag on growth with governments having to allocate a greater portion of their revenue to servicing their debt rather than infrastructure, welfare or other more growth-producing activities. Which the people are pushing for thus increasing tensions in those countries for reform.
Reduced growth potential weighs on the currency as it makes the region a less attractive place for international investors to invest, and this reduced demand for the currency. Pound to euro rates could be set to have a rocky week, I would therefore suggest getting in touch with us to update your situation and currency requirements.
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