The Italian general election, due to take place in March has the potential to cause volatility for the Euro with growing support from voters to leave the EU, despite positive economic data indicating Euro strength for 2018. The table below shows the difference in Euros you could have achieved when buying £200,000.00 at the high compared to the low during trading hours on Thursday.
|Currency Pair||% Change||Difference on £200,000|
The Euro zone has been going from strength to strength of late and has grown at it’s fastest pace in 2017, the most significant gain in over a decade.
The Italian General election does have the potential to cause trouble for the EU economy however. It is due to take place in March and there are parties who are anti-European gaining popularity.
A recent Pew survey suggests that 34% of Italians would like to leave the EU, Greece is the only country above this percentage and their debt to the International Monetary fund is border line unpayable.
Most parties in the election race are however pro-European and they are trying to appeal to the Eurosceptics which is a step backwards in regards to European integration. It is very difficult to ascertain what will appeal to the voters and is far from black and white.
The Five Star Movement are gaining popularity and if they were to gain power there is the potential for a referendum which has been coined Italexit. We saw the damage to the Pound caused by the vote to leave the EU. If Italy were to call for a referendum it may not be as significant as when the UK called for a vote to leave, but it would still damage the Euro heavily.
Wednesday brings Manufacturing and Services Purchase Manager Index (PMI) data. These measure the health of each sector and give an indication as to the current health of the economy in question. Services data in particular could cause a change in Euro value as it makes up a large amount of the bloc’s GDP.
The Monetary Policy Meeting Accounts gives an overview of the financial market along with monetary and economic developments. It also gives an analysis on monetary policy stance. It’s purpose is to give the public a rationale behind current monetary policy, but it can also give a hint towards future monetary policy which is what investors will be keeping a keen eye on.
On Friday we have EU Consumer Price Index (CPI) figures. CPI demonstrates inflation. Mario Draghi, the President of the European Central Bank (ECB) has stated that in order for a cut in Quantitative Easing or a hike in Interest Rates we will have to see Euro zone inflation data move closer toward the central bank’s target of 2%. Inflation has been a stumbling block for the Eurozone in the past so if we see an increase we could see a rise in Euro value.
For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.
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