ECB under pressure – Can they really act?

Yesterday saw the release of German business confidence figures and the figure released was actually the best we have seen in almost 6 years.

The think tank IFO (Institute for Economic Research), based in Munich reported that their business climate index sat at 112.3 Points compared to 111.1 last month, this is officially the highest level since July 2011.

With Germany being the largest economy within the Eurozone many would think that this would lead to strength for the single currency, but what we actually saw yesterday was the opposite and the Euro lost ground against the Pound.

My theory behind why this is happening is due to the fact that this actually cause the European Central bank a huge problem. We need to remember that the ECB is not only responsible for Germany, France and other larger economies, but also Greece, Italy and those that are struggling too.

Germany will be pushing for Mario Draghi to take into account their figures for future economic policy but this could potentially cripple the economy of those that are finding life tough at present. In my view I feel that we will see huge problems for the Eurozone as a whole as the year progresses and I would not be overly surprised to see the European debt crisis to start to hit the headlines again which in my view may weaken the Euro.

Le Pen to lead Euro to 15 year low?

I read an article on Bloomberg yesterday stating that economists currently have the view that should Marine le Pen win the French elections we may see Euro exchange rates drop to a 15 year low.

In a survey conducted by Bloomberg, 23 out of 38 economists that responded to the survey expected EUR/USD to drop below 1$ which would be seen as the equivalent movement for the Euro that we had for Sterling the day after the referendum vote.

There is so much going on around the world at present that you need to be ready for action and prepared should we have a large movement.

You can set rate alerts, check live mid-market exchange rates or request a free quote right here on this site so feel free to contact us if you have a pending requirement and one of our experienced traders will be more than happy to contact you personally.


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