President Macron has offered for France to pay more into the EU budget, whilst Angela Merkel has said that an 'open debate' is required before any decisions are made. This Euro report looks at the way future EU budget discussions could impact the single currency. The table below shows the difference in Euros you could have achieved when buying £200,000.00 during the high and low points of the past 30 days.

Currency Pair% ChangeDifference on £200,000
GBPEUR2.2%€5,050 EUR

Is this the end of the Euro’s strong run?

The Euro has fought back against the Pound but has fallen against the US Dollar over the last few days. However, could we see the Euro running out of steam vs the Pound towards the end of the week?

The European Central Bank hold their latest monetary policy meeting on Thursday and I think we could see a problem ahead for the single currency.

Eurozone inflation remain low and this means rates are likely to be kept on hold for a long period of time creating a bigger disparity between the US and potentially the UK if we raise rates in the next fortnight.

Although I do not expect to see any changes to either interest rates or the current QE programme, the wording of the statement could be crucial to how the Euro will perform against the Pound. As inflation remains low I think Draghi could be rather dovish and I think we could see the Pound make gains vs the Euro.

This morning we see the release of Services PMI data for both Germany and the Eurozone. Both are likely to have an influence on Euro exchange rates to start the week.
Inflation data to make Euros cheaper as we start the week?

Political Problems ahead in the Eurozone

As covered recently by my colleague Dayle Littlejohn there appear to be problems politically in the Eurozone at the moment. Angela Merkel and Emmanuel Macron have held talks about the future of the Eurozone as both leaders try to agree a mutual decision on future reform. With the UK set to leave the European Union there will be a hole left in the budget and this is part of what the talks will involve.

Macron has said that he would be prepared for France to pay more into the EU’s budget whilst Merkel is not yet ready to commit anything too expensive. Merkel went on to say ‘we need an open debate and at the end the ability to compromise.’ Both leaders agree that reform needs to take place but they have disagreed on the details.

The next meeting to discuss the topic further is due to take place in June at the European Council Summit and if things cannot be agreed this could potentially cause a problem for the Euro over the next few weeks.

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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.