The struggle continues for long term Euro strength

The single currency has continued to struggle as further interest rate rises from the US Fed throughout next year seem more and more likely.

The Euro is marooned on the 1.04 mark against the greenback, as mounting political uncertainty and growing financial factors handicap the Eurozone’s ability to draw investors away from the attractive interest rates being offered by the safe haven US Dollar.

Political instability and terrorism

Although we haven’t seen an immediate reaction from the markets following the attack in Berlin I think anyone with a Euro requirement in the coming months should take into consideration the political implications that may result from the saddening scenes in Germany.

Germany’s Chancellor Angela Merkel now finds herself in a tough fight with the right in a bid to keep the country united, who have already questioned her, and indeed the EU’s immigration policy moving forward.

Being Europe’s leading economy, any political instability that may sway Germany’s commitment to the Eurozone will almost certainly drag the single currency’s value into doubt.

As the authorities move closer to capturing the suspect behind the attacks and subsequent statements from public figureheads are released I expect to see a fair amount of Euro Weakness to follow, presenting a number of short term opportunities for well-informed Euro buyers to capitalise on.

If you have a Euro requirement over the coming weeks, I strongly advise you to get in touch with your account manager here, who can help you make an informed decision should one of these opportunities present itself.

Financial factors

Yesterday saw weight added to the financial banking crisis in Italy as the government approved a €20bn bailout plan in a bid to rescue it’s struggling banks. One of which is Monte dei Paschi, Italy’s oldest and weakest bank, which is looking directly down the barrel of bankruptcy as it’s attempts in raising €5bn in fresh capital before the end of the month seems to be producing little reward.

This coupled with the recent setbacks in Greek’s bailout plan will have added further pressure on the ECB’s Quantitative easing strategy and could spell further Euro weakness in the long run.

EUR 1.20 resistance

Euro sellers would have been pleasantly surprised that the single currency has been able to prevent Sterling from breaking through the 1.20 mark, for now.

Anchored by the growing number of fresh political rumors surrounding Brexit, the pound has struggled to capitalize on all the political and financial instability within the Eurozone and has even been forced to surrender some of the strong gains it has made over the course of the last month.

In fact, since last Thursday, we have seen a number of short term selling opportunities for Euro holders. With the Pound having dropped as low as 1,183 over the course of the week, our well informed clients could have taken home an extra £3,000 on a €200,000 transfer.

With the Euro struggling in the wake of Italys banking crisis, those holding the Euro may be prudent to make a decision sooner rather than later. Call our team today on 01494 725 353 or email bts@currencies.co.uk if youd like to discuss a transfer.

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