Supreme Court Judgement on parliamentary vote
If you are in possession of Sterling and buying Euros, the next event that could cause significant movement on GBP/EUR is the Supreme Court Judgement on whether parliament will get to vote on the triggering of article 50. If parliament get the vote this would greatly increase the chance of a soft brexit, which would be seen as very positive for Sterling. I think there is the strong possibility this will be the scenario and I would expect the ruling to come through between 12th- 17th January. I would think GBP/EUR could push above 1.20.
Potential causes for Euro weakness
On March 15th the general election is due to commence in the Netherlands. Geert Wilder is the head of the PVV party and he is very anti-EU. There is the possibility he will gain power and if this is the case we could well see a referendum. Consider that when Britain voted to leave the EU, GBP/EUR dropped by 30 cents from December 15. At the end of April France’s election will also kick in to gear. Marine Le Pen is another politician with strong resentment toward the EU membership and she would no doubt be prepared to hold a referendum due to her views on immigration.
Later in the year we also have Germany’s election and Angela Merkel could risk her position due to her very liberal stance on immigration and frequent terrorist attacks occurring throughout Europe. The chances of all three countries having right wing governments are slim, but even one could spell serious trouble for the Euro.
There are also still concerns over Italian banks, Greece and not to mention the ECB’s seemingly unwinnable task of staving off deflation. If I was a Euro seller I would be very tempted to get my trade done.
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