Key European leaders held a meeting yesterday and have concluded that the UK will not be open for discussions until article 50 is officially triggered. Inflationary figures for the EU on Thursday are expected to reveal positive.

EU leaders state no talks will be held with the UK

Major leaders including German Chancellor Angela Merkal, French President Francois Hollande and Italian Prime Minister Matteo Renzi, met yesterday to unify the European Union.

They have stated they will not hold talks with the UK until article 50 has been triggered. The French President wants this to be sooner rather than later as the uncertainty is also going to be having a negative impact on the Euro.

Will GBPEUR continue to fall?

It was only a year ago when Greece were stealing the headlines with ‘Grexit’ talks and at that stage we believed if Greece had left the EU potentially other countries could have followed suit. Now that the UK have left the EU rumours are emerging that large parts of countries within Sweden and France want to hold their own referendum in regards to EU membership.

In the short term I expect UK politics to steal the headlines and therefore GBPEUR to continue to fall towards the mid 1.10s. However if countries announce they will hold a referendum of their own the Euro will start to weaken and consequently GBPEUR will rise back into the 1.20s.

Inflation set to rise

In recent months Consumer Price Index (also known as inflation) has been falling globally and in particular within the Eurozone. The central bank have cut interest rates and increased the amount of money supply entering the European Union in a bid to improve worrying inflation levels. This Thursday the Eurozone release their latest inflation numbers and a slight rise away from deflation is expected. Therefore this should provide support for the Euro.

The results of the Referendum will likely put pressure on the Pound and Euro in the weeks and months to come. If you have a requirement for Euros, please get in touch with us today on 01494 725 353, or email drl@currencies.co.uk.

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