The euro ended last week at a 5 week low versus the pound, as Brexit developments suggested that a no-deal was appearing to be a less likely outcome, and that the UK could extend Article 50 giving the UK Government longer to secure a deal. The euro has been considerably weak in recent times, with political unrest mounting across the whole of Europe.
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In Paris over the weekend, Police fired water cannon and tear gas to try and contain thousands of ‘yellow vest’ demonstrators from the Arc de Triomphe monument, who were protesting for the ninth weekend in a row against French President Emmanuel Macron and his economic reforms.
To add to this, Greek Prime Minister Alexis Tsipras announced over the weekend that he would call a vote of no confidence in his Government. This followed from the resignation of his coalition partner and defence minister, Panos Kammenos, who quit over a long standing dispute with Macedonia over its name, claiming that he would take another 6 cabinet ministers with him.
It was recently agreed that Greece’s Northern neighbour would be named ‘North Macedonia’ as ‘Macedonia’ could only be used in reference to the Greek province with the same name, blocking Macedonia’s hopes of joining the European Union and Nato.
This has left the Greek Prime Minister without a Parliamentary majority, and could signal the potential for a snap General Election. The confidence vote is expected to happen later this week, and if the Government loses, the next General Election which is expected in the Autumn could be brought forward. So much political uncertainty does not bode well for the European economy nor the value of the euro, as it makes it a far less attractive option for investors to hold their funds in.
This morning at 10:00am, Industrial Production figures will be released for the European area in November, and are expected to fall from 0.2% to -1%. This week is set to be volatile for GBP/EUR rates especially, with the UK voting on Theresa May’s Brexit withdrawal bill tomorrow, therefore clients with a currency requirement in the near future could benefit from moving sooner rather than later to eliminate risk from market movements in either direction.
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