Yesterday the Eurozone released its latest set of GDP (Gross Domestic Product) figures, where a reading of 0.3% for the quarter was received, in line with a previous reading from October. Perhaps most worryingly, Germany – the powerhouse of the Eurozone recorded an unexpected slowdown in GDP from 0.4% to 0.2%. However, Italy – the third largest economy of the Eurozone recorded growth up 0.3% for the quarter.
With such a mix bag of results, this will now ask some difficult questions on the course of action Mario Draghi, Head of the European Central Bank will choose to take.
Mario Draghi is expected to speak on Friday and any hint towards the extension of the current quantitative easing programme (expected to end in March 2017) could be Euro negative.
After discussing the current economic directive for the Euro, our thoughts now turn to politics. Attention will be heavily focused on the upcoming European elections in both France and Italy.
This coming weekend marks the first primary for candidates competing to become the French-Centre candidate for the spring presidential election.
On Monday, the Euro was down both against the US Dollar and the Pound. I think as the Eurozone’s political troubles come into view, with an anti-establishment, extreme right political movement widely expected, this could be problematic for the Euro. Clients looking at selling Euro’s to buy Sterling have experienced fantastic opportunities of late following the UK’s decision to leave the EU. I personally believe that the political landscape within the Eurozone could well be about to change, it may be wise to look at your options as to how we can assist you with repatriating your funds.
Closer to home, at the end of this week, Consumer Price Index (inflation) data will be released. This figure is expected to drop slightly from the previous month and remain steady for the year on year figure. This result will be heavily linked to the tone of Mario Drahi’s speech on Friday, if this figure disappoints I would not be surprised to see Euro weakness.
With markets waiting for hints from the ECB on further changes to their QE programme, Friday could prompt weakness for the Euro. Clients holding Euros to buy Sterling may wish to discuss your options prior to Draghis speech. Email me here if youd like to discuss your currency requirement.
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