With Brexit taking up all of the headlines in the UK it is easy to forget that there are other nations in Europe facing their own political turmoil at present. The ‘gilet jaunes’ or ‘yellow vest’ protestors as they have been referred to in France due to their distinctive choice of clothing, began protesting due to an increase in fuel taxes at the end of last year which has now evolved in to anger towards France PM Emmanuel Macron’s economic policies as a whole.

Currency Pair% Change in 1 monthDifference on £200,000
GBPEUR2.5%€5,600

Macron is set to begin a series of national debates today in an attempt to appease the issues brought forward by the protestors, which has arguably been one of the biggest challenges he has faced so far and has caused widespread damage and disruption across the nation for weeks. Any clients with a Euro requirement should keep an eye on how this unfolds as any further political uncertainty is likely to weigh on the value of the Euro.

ECB to push back rate hike to 2020

On Thursday this week December’s inflation price will be released and a small upturn is expected compared to November’s figures which would lend support to the ECB raising interest rates later this year, as forecast at the end of 2018. This being said, there are still concerns across the Eurozone that the ECB will push back their move from negative interest rates into 2020. The main reasons are being sighted as the global risks that are spearheaded by US President Donald Trump’s protectionist policies, Brexit and fears of a recession in Germany owing to a slowdown in car manufacturing.

Macron under pressure from the gilet jaunes

The next policy meeting for the ECB is January 24th and ECB President Mario Draghi is scheduled to speak today at 15.00. It’s unlikely that any change in policy will be announced on the 24th, but any clients with Euro exposure should keep a close eye on developments on this topic as the less likely the chance of a rate hike this year, the more likely we could see Euro weakness going forward.

The key topic for anyone with a EUR/GBP requirement will be today’s vote on Theresa May’s withdrawal bill which has been covered in greater detail in today’s GBP report. The EU issued a letter to May yesterday to attempt to provide assurances over the Irish backstop and their commitment to wanting to achieve a smooth Brexit. But the DUP have expressed their concerns in response to this letter in stating that the EU give ‘no legally binding assurances’ on the Irish backstop and that from their letter, nothing has changed from what we already knew.

The vote is set for between 19.00-21.00 this evening and is likely to have a significant impact on exchange rates, so keep in touch with your account manager for all the latest developments and market movement.

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