This Euro report discusses some of the factors that could affect Euro exchange rates this week, such as the potential issues in Greece.

ECB’s stance likely to keep Euro rates on hold

The EUR has no doubt benefitted from the uncertainty surrounding the UK economy at present and as such has gained in value despite the Eurozone economy remaining unstable. This has been a trend on GBP/EUR rates for the past twelve months with both the Pound and Euro having fabricated valuations, due to the on-going problems facing both economies. The Eurozone is far from settled and with Greece starting to come back into the media spotlight this week ahead of its next repayment deadline, expect further uncertainty to cloud the markets over the coming days and weeks.

Greece was one of the driving factors behind the Euro’s loss of value last year and if they do default on any upcoming payment, or try to renegotiate the terms of their bailout package, then I expect the EUR to face further scrutiny over the coming weeks. How GBP/EUR rates will react to this is uncertain and will be dependent on the current climate within the UK. Investors have no risk appetite at present and it is likely that will chose which economy they view as the lesser of two evils and react accordingly. My point is that we just don’t know what’s going to happen and the uncertainty being created is causing the majority of the problems. I would not be gambling on the current market, if I was selling EUR I would view the improvement we’ve seen since the turn of the year (much of which was completely unexpected) and secure my position ahead of the referendum.

Euro strength not guaranteed regardless of referendum result

There is always going to be an element of risk involved that the market conditions will but I can see no tangible evidence that the EUR will continue to make great strides, even if we do get a Leave vote, due to the pressure it will be under by various flagging economies. The European Central Bank (ECB) will also be keen to keep the EUR value down, in order to keep exports viable and with the BoE showing a similar stance we may find that GBP/EUR rates have found their level for the time being between 1.25-1.30.

Looking ahead and its very quiet day for the Eurozone, so markets will focus on Thursday’s Industrial Production figures, which are expected to show an improvement on previous. However, the key release for those clients holding the single currency will be Friday’s Eurozone GDP figures. If these come outside of expectation expect additional volatility on EUR exchange rates.

I hope you found my Euro currency report, if you have any questions about Euro exchange rates I would be more than happy to discuss them. Please feel free to email any queries to mtv@currencies.co.uk.

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