Yesterday Italy came to a standstill when an earthquake ripped through the centre of the country. So far 38 people have been reported dead and 150 people are missing. Here at Foreign Currency Direct plc we would like to send our thoughts and prayers to all of the family and friends of the people injured and tragically killed by the natural disaster and wish the injured a speedy recovery.
Natural disasters can have an impact on the country’s currency. Investors are known for moving their assets out of the country and into safe haven currencies to protect their investments. Furthermore, the country has to spend money to rebuild the country and obviously this comes at a cost which can also devalue the currency in the future. This could be one of the reasons why the pound made over a cent gain against the euro yesterday.
German Chancellor Angela Merkal spoke yesterday in Estonia and her major point was the 27 members that will remain part of the EU must listen to each other and avoid making any rushed decisions. Combine this with the EU council’s decision to allow Spain and Portugal to run higher deficits than EU guidelines, it seems that the leaders / powerhouses of the EU are trying to keep all of the countries happy as there could be potential tough times ahead if the UK leaves the EU.
Presently if you are selling euros, you are trading at 3 year highs. Many clients have asked the question could sterling weaken further against the euro due to the ‘Brexit’ and I believe there is a good chance of this. However, I still feel there are cracks appearing within the Eurozone and at any point other countries could follow in the footsteps of the UK, which in turn could devalue the euro.
The Pound has recovered some its losses this week. If you need to buy Euros now could be a good time to do so. Call our trading floor on 01494 725 353.
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