This Euro update examines factors that could affect EUR exchange rates this week. In the table below you’ll see high to low GBP/EUR exchange rate movement when exchanging £200,000 to Euros over the last three weeks:

Currency Pair% ChangeDifference on £200,000
GBPEUR4.1%€9,400
European Economic Sentiment falls for third month in a row

Questions being asked of the Euro

The recent fall from grace for the single currency has lead a number of our Euro buying clients to question the next step. Shall we hold on and hope Euros will become cheaper still? Or should we cash in on these 3 month highs before Brexit uncertainty slashes these levels once more?

The latter seems a sensible shot to me. The markets have based a lot of the Euro’s strength this year on consistent economic growth coming out of the Eurozone. Yesterday once again provided reason for caution as the European Central Bank (ECB) commended the results from its testing of the European banking sector. The ECB went on to highlight that growth across the EU’s 19 regions is flying at its fastest levels since 2011.

I take the point that there is still a long way to go until European interest rates are lifted (making it competitive on the international stage) however I am confident the currency market hasn’t forgotten the huge strides the “struggling” European countries have made since the start of the year. I hope our clients haven’t either.

German election: The Euro’s unshakable platform?

I doubt very much that many could have imagined a better political landscape for the Eurozone at the beginning of 2017. Following the UK's Brexit vote and Donald Trump’s surprise presidential victory in the United States, a wave of populism was predicted to hit European shores.

As a result, the markets began to factor in a potential breakdown of the EU, with many imagining key pro-European figureheads being ousted by their nationalistic counterparts.

Geert Wilders’ Party for Freedom in Holland, the Red Star movement in Italy and of course Marine Le Pen’s Front National in France were all given a good chance by the markets. However none came in victorious and the Euro strengthened every time.

The same can be expected from this weekend’s German election as Chancellor Angela Merkel looks set for yet another tenure at the top. Even in the unlikely event Merkel loses out, her closest rival Martin Schulz would do very little to sway investor confidence in the Euro, given his similarities in pro-business convictions to the French President Emmanuel Macron. The ties between the 2 leading European economies being without doubt the primary concern for the markets short term.

As a result, I see very little reason for the Euro to get much cheaper than 1.15 in the short term. At the other end, should Brexit uncertainty once again kick into gear, a drop back down through 1.10 from the Pound is certainly within the realms of possibility. With this context in mind, those looking to buy Euros in the near future may wish to take advantage of these current levels.

Thank you for reading my Euro currency report, if you have any questions about Euro exchange rates I would be more than happy to discuss them – you can contact me with any queries at bts@currencies.co.uk.

News

Read more articles

 

Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.