On the continent there have been a number of different problems politically in recent weeks. If we look at Spain, the next general election is due to take place on April 28th and this could put some pressure on the euro in the weeks ahead.
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When Mariano Rajoy was dismissed back in June 2018 as Prime Minister of the People’s Party he was replaced by one of the shortest lived governments in Spanish history as his replacement Pedro Sanchez was forced to call the elections for next month.
One party who have been gaining some ground recently are the Vox party and although they are unlikely to win their popularity has been increasing which is a concerning factor across Europe.
Meanwhile, Italy is also experiencing some problems at the moment as they are currently in recession. One of the European Central Bank (ECB) members Ignazio Angeloni has suggested that Italy’s recession has been caused by itself and its recent choices within its Budget.
Italian inflation data is due out on Friday morning with an expectation of 1.1% and this will also take place at the same time as Eurozone inflation data which is expected to come out at 1.5% year on year so any fall in the figures could put further pressure on the euro and the ECB to keep interest rates on hold for the foreseeable future.
Indeed, ECB president Mario Draghi has acknowledged risks to the economy are moving negatively and in their meeting at the end of the year the Central Bank downgraded both its growth and inflation forecasts.
There are fears that France is moving close to a recession, combined with a recession in Italy and the ongoing uncertainty caused by Brexit the future for the single currency looks rather uncertain.
With Brexit continuing to dominate the headlines the pound vs the euro will potentially be experiencing a lot of volatility in the short term so if you have a currency transfer to make be sure to keep in close contact with your account manager.
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