The Euro has really struggled in the last month hitting close to a 10 year low against the US Dollar and a 2 month low against Sterling. The last time the Euro was this low against the US Dollar was in March 2015. Since the US election the single currency has plummeted partly owing to Trump’s relationship with the European Union. As Trump was such a key figure in the Brexit talks it is clear that he favours the UK over the Eurozone and this is part of the reason for the recent weakening of the single currency.

The European Central Bank president Mario Draghi has been rather cautious in his tone in recent weeks opening the door to potential further Quantitative Easing when the central bank next meets on 8th December. Clearly there are still ongoing problems for inflation on the continent which is worryingly low and QE has seemingly failed in its attempts to combat the fall. Therefore, I expect the ECB will intervene with further stimulus which could lead to further Euro weakness against Sterling and the US Dollar.

What impact will Brexit have on the value of the Euro?

Whilst most of the Brexit talks have focused on the UK the currency markets do not appear to have looked at the negative impact this may actually have on the Euro. With the Italians due to meet soon to discuss constitutional reform and the French presidential election five months away Marine le Pen appears to be going from strength to strength. Le Pen is now polling 20% of the vote compared to 17.9% in 2012 and appears to be guaranteed to make the second round of elections next year.

Her tone is very much focused on national identity and that immigration needs to be curbed. If the French make noises to look at having their own referendum at some point next year I think this could cause further cracks within the European Union and therefore longer term weakness in the value of the Euro. If you’re in the process of selling a property abroad and want to fix an exchange rate for a future date then it may be worth looking at buying a forward contract which allows you to guarantee your exchange rate for a small deposit.

With a number of political and economic concerns building within the Eurozone, clients may benefit from discussing key timelines to plan around these major events. Email me here or call our trading floor on 01494 725 353 if youd like to discuss a transfer.

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