This Euro report discusses what could affect Euro exchange rates this week. In the table below you’ll see high to low Euro exchange rate movement when exchanging £200,000 to Euros over the last 6 weeks:
|Currency Pair||% Change||Difference on £200,000|
I take my hat off to the courageous Euro sellers out there who managed to hold tight and let the results of the election shock the markets and see Sterling’s value plummet by as much as 2% overnight, resulting in an extra £3,800 on a €200,000 transfer.
It is a remarkable shift in sentiment since the day the snap election was initially called and it now seems there are plenty of reasons for Euro strength to continue with the European central bank stating it will continue to support the zone for as long as it takes to promote long term economic stability and growth.
Concerns for inflation were highlighted however, so those with a short term buying requirement might consider getting in touch with their account manager before the Consumer Price Index records are released for the Eurozone’s powerhouses Germany and France in the latter part of the week. An unexpected increase on both counts may well lead investors to question the ECB’s reaction and as such could provide a sharp spike in the market to help recover some of the heavy losses seen over the weekend.
With Brexit talks to begin in just 8 days it is clear that the political uncertainty in the UK will continue to be the main driver for GBPEUR exchange rates short term. Since the referendum vote last year, rates have fluctuated between 1.10 and 1.20, finding resistance at both ends when the UK’s negotiating stance seemed to strengthen or weaken according to political releases and economic forecasting.
Evidently, following Friday’s result, investors will be concerned by the weakened stance the UK will now face the EU with, and I expect to see Sterling continue to weaken as a result. In fact, it seems the 27 EU members have already started to dictate affairs, insisting yesterday that the UK must first pay the price for its divorce with the Union before negotiations take place regarding free movement and access to the single market.
Long-term Euro strength however rests on the political stability within its two major players, France and Germany.
France passed the first test in the eyes of investors having convincingly voted in Emmanuel Macron as president to put an end to the wave of populism that was crashing through Europe. Macron plans a number of positive reforms all geared around driving foreign investment and making France more competitive on the international stage. In his words, giving life once more to the European dream.
These reforms however must be passed by l’Assemblé National who’s 557 members are currently being voted in, with the second and most decisive round to take place on the 18th of June, a day before Brexit negotiations are due to commence.
According to polls, Macron should be taking a commanding lead into the second round however, those selling Euros should remember that France was very evenly divided between 4 front runners in the first round of the election opening the possibility that Macron may not be able to attract the support needed to follow through on his promises.
If you would like to know more about Euro exchange rates you can contact us with any queries on +44 (0)1494 725353.
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