The single currency got off to a strong start to the month against the Pound during trading yesterday despite very shaky reports from the latest Business sentiment survey posted by the Eurozone’s major players (Germany, France and Italy). Sterling still surrendered nearly 60% of last weeks impressive gains as the markets once again begin to re-evaluate the UK’s position in the on-going Brexit talks. More on the outlook for the single currency this week in today's Euro report, the table shows the range of exchange rates throughout the past 30 days and the potential difference in Euro return when selling £200,000.00.

Currency Pair% ChangeDifference on £200,000
GBPEUR1.5%€3,400

The question is, can the Euro now capitalise on the market’s lack of faith in the Pound and push back below the 1.10 level?  It will be interesting to see how this morning’s inflation figures come out. Given how poor last week’s Consumer price index proved to be, I would worry that a drop in prices for domestic commodities may push the Bloc further away form it’s 2% inflation target.

This may well provide Euro buyers with a brief spike to capitalise on as it would further justify the European Central Bank’s cautious monetary policy stance (making the Euro far less valuable in the eyes of investors).

This could be further compounded by tomorrow’s retail sales figures which, if last week’s worrying data from Germany filters through, could anchor the Euro even more. Those looking to buy Euros with Pounds could potentially look at booking a rate around this release to maximise their returns.

In the scheme of things however, I still feel it is more likely the Euro will end the week more expensive than it started, particularly with the splintered political scene UK side still hindering the Pound’s progress. If Friday’s GDP figures from the Eurozone retrieves some of the momentum from the start of the year, there is a chance the Euro will push further.

Salzburg Summit Significance Increase

Can the Eurozone’s finance ministers convince the markets?

Top finance ministers of the Euro bloc reunite in Vienna this week to once again discuss the creation of a revamped Bail-out scheme to further solidify Europe’s banking sector. Talks of a European reform have been going for many years now but there is a good chance talks this week will be brought into the spotlight following all the concerns from last month’s Turkish crisis. The talks also come just as the leaders of the Five-star movement, one of the governing parties in Italy, reinstated their position regarding monetary policy, making it clear they will ignore the latest Fitch ratings and remain committed to extending the country’s public spending to stimulate the economy. Certainly not the kind of news that Euro holders will be holding out for.

If the markets are going to regain any kind of sustained faith in the single currency long term, these meetings in Vienna will certainly need to provide clear signs of unity and proactivity from the bloc’s members to resolve the multiple financial and geopolitical situations on the horizon.

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