The Euro is being affected by the referendum and is vulnerable to economic releases this week.

BREXIT threat on the EURO

The threat of a Brexit has weighed heavily on the UK Pound with rates dropping over 10% in the build up to the event against the Euro however its potential impact has started to ramifications on other currencies including the Euro.

The implications of a possible ‘Leave’ result on the EU are becoming increasingly likely and pressure has started to build on the Euro. Its value has started to fall against a number of currencies including the USD and the JPY.

There are other factors too including Spain’s election next Sunday and a referendum in Italy on constitutional reforms, longer term we also have the French and the German elections next year. It seems that the political risks are not going away, Brexit could be a ‘huge deal’ for the UK but will also be a ‘big deal’ for the Euro.

Economic Data this week

Outside of the BREXIT decision economic data will continue to have an impact on market value. Business Confidence tomorrow is the most likely to result in a movement, generally negative for GBPEUR however with Stocks climbing across a majority of Europe as traders move into safe havens it is expected a positive tone to be seen making the Euro more expensive to buy. Added to that the additional uncertainty as we get closer to the Brexit decision anyone waiting to buy funds before the decision really has to have a very strong reason to do so.

Greek Update

Some may have long forgotten about the debt problems in Greece but this has certainly not been forgotten across trading floors. They continue to have difficulties meeting demand by creditors which is in turn slowing the release of loans.

On Friday the latest tranche was released of €7.5 billion which was also symbolic as the first review of Greece’s bailout programme was recently completed.

Greece owes over €300 billion equal to more than 180% of its annual economic output and remains a thorn in the ‘European program’. Eurozone leaders and the International Monetary Fund remain in discussions about how to resolve the problems in Greece. Germany seems to be the main hurdle stopping any debt relief being phased in, it was even suggested by the IMF that a 20 year loan should be introduced but I think that unlikely. Germany has a general election late next year and it seems very probable that a long term solution will be agreed before this date meaning this topic is likely to return as a key factor to market movement and the Euros’ value.

Do you have a requirement for Euros and are concerned about the impact the EU referendum might have on exchange rates? Call our trading floor on 01494 725 353 or email me here and we will be happy to assist you further.

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