The ECB have a challenging time balancing the economies of 28 members. With the likes of Greece and Portugal dragging their heels could the ECB need further monetary intervention?
Yesterday it was highlighted again that concerns across Europe including the refugee crises, economic problems across a majority of member states, the elections within the next 12 months in France, Italy and Germany are impacting confidence.
The German ZEW survey was released and showed another fall, this being the confidence levels in Germany, the ‘engine room’ of Europe.
This resulted in a fall in the Euro making it cheaper to buy. Moving forward I expect confidence to be hit both sides of the channel as negotiations continue to try and paint a picture of the UK’s position in the world following the referendum result.
The European Central bank held back from extending their QE program currently in place as many had expected. It is currently scheduled to finish in March of next year however an extension until September was widely expected. Mario Draghi did however comment on the potential of an extension. He also indicated that the European Central Bank is addressing concerns about the potential lack of assets it can buy in the near future. These could result in removing some of the restrictions that the ECB put in last year with regards to deposit limits within the banking sector now that the global economic crises has passed. Further information on this topic is expected at their next meeting and could, if confirmed, weaken the Euro and make it cheaper to buy. This is an event which could make half a cent difference in buying the euro with the pound potentially.
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