The European elections next year could cause further turmoil in Europe following the UKs vote to leave the EU.

IMF’s economic warnings highlight Eurozone weakness

Christine Lagarde, the Managing Director of the International Monetary Fund issued another stark warning to world leaders at the G-20 summit over the weekend. She warned that all major economies must use all available economic and financial tools to counter global growth, and that growth must be more inclusive and benefitting of all people at a time when the world is seeing a backlash against international trade and globalisation.

When reading this update, I couldn’t help but think she’s alluding to the political divisions and return to populism from many in European politics, and with Germany and France both set to have general elections next year it’s likely that the IMF have this in mind, and consider them a risk just like the UK’s EU referendum this year.

It’s worth noting that another IMF downgrade would make this year’s global growth rate the slowest since the financial crisis in 2009, and I think that the Pound could benefit if global uncertainty increases as much of the ‘Brexit’ uncertainty has already been priced into the currency, therefore the knock-on effects won’t be as dramatic.

Humiliating defeat for Angela Merkel on home turf

On the subject of political elections, German Chancellor Angela Merkel received a substantial blow over the weekend as her ruling CDU political party was beaten by Germany’s Far-Right Alternative fuer Deutschland (AfD) in her own constituency, and it’s fair to say this is a direct result of her immigration policy as AfD are stanchly opposed to her polices.

If this is an indication of things to come, I expect major headwinds to come for the Euros value, and I think those looking to repatriate may be wise to secure their currency around the current 3 year highs as they may not be around for much longer. If you wish to book todays rates but don’t have the full amount you wish to convert available, contact us to discuss how a forward contract could benefit you.

This week’s major economic announcement is likely to come out later today. At 10am Eurozone GDP (year on year) will be released reflecting the 2nd quarter of this year with 0.3% the expectation. Expect any sways from this figure to effect the Euros value and feel free to get in contact if you wish to discuss trading around this potentially volatile news release.

For more information on how next years European elections could impact your Euro requirements, call our traders today on 01494 725 353.


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