Euro Rate Forecast

Currency experts forecast on the Euro

Buy Euros latest: Italian debt hurts the Euro

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EU set to punish Italy for rising debt

If you plan to buy Euros, it might interest you to know that EU finance ministers have agreed to pursue plans to penalise Italy with a fine to the value of £3 billion. Last week, the ministers confirmed that Italy’s high debt contravenes EU regulations, prompting the European Commission to take steps to punish the Italians.

On top of the ongoing budget dispute, Italy appears more likely to leave the Eurozone than anyone else. This is after a proposal to create mini-BOTs, a parallel currency to run alongside the Euro, which can be used by the Italian government to ease debt. This is a controversial method to say the least.

Matteo Salvini, Italian Deputy Prime Minister, stated that “We don’t need to ask Germans, Spanish and Luxembourgish for money. We want to use Italians’ money for Italians.”

The Euro is suffering due to this situation and investors are watching with a keen eye. This does have the potential to weaken the Euro further against the majority of major currencies. It is close to a two-year low against the US Dollar.

Is the Euro going up?

The Euro has suffered of late due to several contributing factors. The latest is the European Central Bank’s (ECB) June assessment of the Eurozone economic outlook, which was perceived to be worse than expected. This due to global demand issues and slowing domestic economies.

Analysts had predicted that the ECB would change the Eurozone’s interest rates before long.

However, Mario Draghi, President of the ECB, recently suggested that policymakers are now likely to wait for a longer period before raising rates. Mr. Draghi said that the ECB have all the necessary tool’s in the toolbox to deal with upcoming issues. In all honesty, there is very little justification for a hike.

Pound to Euro forecast

The decline of Sterling is widely attributed to the increasing probability of a ‘no deal’ Brexit taking place on October 31st. This follows the failure of Prime Minister Theresa May’s Brexit deal to pass through Parliament, and her subsequent resignation.

Analysts from Danske Bank have said a combination of weaker domestic data, global risk sentiment and ECB policy will play a part in a softer GBP/EUR exchange rate, going forward. There have been fears that “non-Brexit drivers [will] weaken the GBP further over the summer.”

However, Brexit will remain the key driver on GBP/EUR. I am afraid that, until we have clarity on the UK’s political situation and Brexit, the Pound will remain fragile.

If you have a currency requirement, I will be happy to assist. It is crucial to be in touch with an experienced broker if you wish to maximise your return. If you let me know the details of your trade, I will endeavour to produce a free, no obligation trading strategy for you.

If you have a trade to perform, I will also happily provide a free quote . I am confident our rates are among the best in the industry. I would be willing to demonstrate this in form of a comparison with any competitor. You can trade in safety knowing you are dealing with an FCA-registered company and one that has been trading for 18 years, Foreign Currency Direct PLC.

If you would like my assistance, I can be contacted at dcj@currencies.co.uk, Daniel Johnson.

Daniel Johnson

Buy Euros latest: Trade wars a concern for the Eurozone

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Germany’s growth forecast slashed

In this look at when to buy Euros, I’ll show you how the Euro’s prospects for the second half of the year have once again been dealt a blow.

Germany’s central bank, the Bundesbank, has decided to revise down its growth forecasts for Germany, as a result of the slowdown in international demand. This is due to the ongoing trade disputes with the US. The Bundesbank has cut its 2019 projections down to 0.6% from 1.6%, showing the fall in business confidence in Germany.

This change in projections further justifies the European Central Bank’s (ECB) hints from last week. ECB President Mario Draghi said that the ECB will consider upping its monetary stimulus into the Eurozone once more, in a bid to help alleviate the problems facing European businesses, and to boost inflation. These are a result of the global trade tensions.

The change in stance compared to the start of the 2019 is huge. Things could be set to get worse, as further contributing factors begin to weigh on the single currency. Despite the Trump administration instigating the trade wars, the US Dollar is benefiting, currently close to a two year high against the Euro. This is due to the greenback’s status as a safe haven currency.

We could see volatility this week, as EU members prepare to meet tomorrow, to discuss how to handle Italy’s seemingly insurmountable debt. There has been much posturing from Rome in the build-up to the talks. Multiple reports suggest that the Italian leaders are confident on being able to cut the deficit below the 2.4% of GDP target required by the EU Commission, and potentially below the 2.04% level that was agreed upon at the end of last year.

However, these reports have been questioned due to previous promises made by the current coalition. Italy’s government has forecast tax cuts and impressive investment programs for 2020, which are likely to be viewed with scepticism by other members of the bloc.

The face-off could cause volatility, as Brussels may wish to impose its authority over Italy, to warn off other EU members from mishandling their debt.

Should I wait to buy Euros?

The Eurozone’s problems do not have the same weight as those of the UK’s, with no Prime Minister and Brexit in limbo. The Pound could be set for further losses, with the majority of candidates up for Tory leader ready to bring a ‘no deal’ back to the table. I expect Sterling to remain fragile for the foreseeable future.

If you have a currency requirement I will be happy to assist. If you let me know the details of your trade I will endeavour to produce a free trading strategy. During a period of such uncertainty it is important to be in touch with an experienced broker, if you wish to maximize your return. We have tools at our disposal to make sure you do not miss out if there is a spike in your favour.

If you already have a currency provider in place, drop me an email with what you are being offered. I am very confident I will be able to demonstrate a significant saving. It will only take you two minutes and I am sure it will be worth your while. You can trade in safety knowing you are with a Foreign Currency Direct PLC, a firm trading for over 18 years and FCA registered.

If you would like my assistance I can be contacted at dcj@currencies.co.uk.

Daniel Johnson

When to buy Euros update: Brexit dictates GBP/EUR

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In today’s update about when to buy Euros, we’ll see how Sterling has fallen in value against the Euro. This is because Prime Minister Theresa May seems to be destined for failure again, when she puts her draft Brexit deal before the House of Commons in early June.

Mrs. May’s deal has failed on three occasions and it seems there is little change from the previous proposals. I believe that the chances of the deal going through are slim.

Strong opposition to May’s Brexit bill impacts GBP/EUR

Titular heads from within and outside the Conservative Party have made it clear that they are in opposition to the current deal. This does not bode well for the next vote in the House of Commons.

GBP/EUR breached 1.17 recently, yet I was unconvinced that the rally would last. I was of the opinion that the rise was false. This is because it was based on positive talks between the Tories and Labour and getting a deal through, before the European Parliament elections held on 23rd May.

I believed there was little chance of this, and I feel the same about Mrs. May getting a deal through in early June. The Prime Minister has had more than two years to negotiate an acceptable deal, and even at this stage, it seems we are far from achieving that.

Brussels’ stance remains the same. The European Commission’s spokesman Margaritis Schinas recently spoke and stated that there would be no concessions made and the deal offered will remain the same.

The breakdown in talks between Labour and the Conservatives has not helped the Pound, and GBP/EUR now sits in the 1.14s. The recent movements show that the Pound to Euro rate is being dictated by Brexit news.

If we look EUR/USD, it is close to a yearly low. This is as investors seek to put their funds into safe haven currencies such as the US Dollar, in times of global economic uncertainty. Another catalyst is the weak economic performance in the Eurozone.

Is the Euro going to go up?

I think the Pound will remain fragile until we have firm progress on Brexit. Again, we are now below the 1.15 resistance point on GBP/EUR that held strong for 18 months, up to pre-March this year. Every time it was breached, the rates quickly retreated. It will be interesting to see if it holds up, moving forward.

Be aware that if Mrs. May resigns following the deal failing to go through Parliament, we could actually witness Sterling strengthen. This is because the Prime Minister’s leaving could be perceived as positive for Brexit negotiations, despite the fact that political uncertainty usually weakens the currency in question.

Let us pray that former Foreign Secretary Boris Johnson doesn’t gain power. He mis-sold Brexit and has tried to undermine negotiations at every opportunity. He is an example of a man with his own agenda, not that of the people.

If you have a currency requirement, I will be happy to assist. If you let me know the details of your trade, I will endeavour to produce a free trading strategy. During a period of such uncertainty, it is important to be in touch with an experienced broker, if you wish to maximize your return. We have tools at our disposal to make sure you do not miss out, if there is a spike in your favour.

If you already have a currency provider in place, drop me an email with what you are being offered. I am very confident I will be able to demonstrate a significant saving. It will only take you two minutes and I am sure it will be worth your while. You can trade in safety knowing you are with Foreign Currency Direct PLC, a firm trading for over 16 years and FCA registered.

If you would like my help, feel free to email me, Daniel Johnson, at dcj@currencies.co.uk. Thank you for reading.

Daniel Johnson

When to buy Euros update: Brexit extension likely

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If you’d like to know when to buy Euros, it may be of interest to you to know that GBP/EUR continues to be dictated by Brexit. The revised deadline is set for 12th April and the UK is again running out of time to agree a deal with the EU or arrange a further extension.

If another extension is granted by the EU it could be for a longer term, which could have stipulations. However, UK Prime Minister Theresa May is hoping that negotiations with Labour leader Jeremy Corbyn will go well, and that he’ll give his support. If so, May will request a shorter extension from the EU later this week and will continue to attempt to gain concessions from Brussels.

This is May’s preferred option, but one that will not sit well with leavers. This is because any deal with Labour is likely to be centred on the UK remaining in the EU Customs Union, which is controversial to say the least. This will be extremely tough to get a majority in the House of Commons, due to the large number of Conservatives being vocally unhappy with this option.

Is the Euro going up or down against the Pound?

Brexit remains in Limbo and GBP/EUR remains range bound. The fact that it remains above 1.15 can only be attributed to the belief that a no deal is not a likely scenario. An extension, which I feel is the likely outcome, could cause a slight strengthening in the Pound, due to an ease in investor concern. That said, do not expect any great shakes.

May has now failed to get her deal through after three attempts, and the Labour option is proving divisive. With Brussels playing hard ball, it seems there is nowhere to go.

Many press releases have recently mentioned Operation Yellowhammer. This is the contingency plan should a no deal scenario occur, and does not make for good reading. It looks at 12 key areas that could be affected, such as healthcare, transport, energy, food and water.

I am confident that an extension will be granted. However, if it is not then Britain will leave with no deal, which would cause the Pound to lose significant value.

If you have a currency requirement, I will be happy to assist. If you let me know the details of your trade, I will endeavour to produce a free trading strategy. During a period of such uncertainty it is important to be in touch with an experienced broker, if you wish to maximize your return. We have tools at our disposal to make sure you do not miss out if there is a spike in your favour.

If you already have a currency provider in place, drop me an email with what you are being offered. I am very confident I will be able to demonstrate a significant saving. It will only take you two minutes and I am sure it will be worth your while. You can trade in safety knowing you are dealing with Foreign Currency Direct PLC, a firm trading for over 18 years and FCA registered. If you would like my help, feel free to email me at dcj@currencies.co.uk.

Daniel Johnson

Sterling Euro forecast: EZ manufacturing shows contraction

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For today’s Sterling Euro forecast, we’ll examine how the Euro took a hit yesterday, following weak manufacturing data. There was a large contraction, which won’t help investor confidence. We witnessed figures of 47.5, and anything below 50 indicates a contraction. Falls were seen in several key countries, such as Italy, France and Germany.

The engine room of the bloc, Germany, took a particularly large hit, with a fall to 44.1. This is a 6-year low, dragging down the rest of the Eurozone’s manufacturing output.

The European Commission had predicted an increase in growth for Italy of +0.2% this year. This is complete opposite of the prediction from the Organisation for Economic Co-operation and Development (OECD), who are predicting a fall of -0.2%. This highlights how uncertain growth in Italy will be this year, which will be a cause for concern amongst investors.

It is not all doom and gloom, however. There has been a slight improvement in Chinese manufacturing data, which is good news for the global economy. China is remaining stable on the growth front, while the Eurozone outlook is looking worse, which could result in Euro weakness. The bloc seems to be bearing the brunt of the global slowdown, with Brexit also weighing on the common currency.

ECB set to add stimulus

Eurozone unemployment held firm in March at 7.8%, while Consumer Price Index (CPI) data fell to 1.4%, going against the general consensus. Inflation is still some way from the European Central Bank’s (ECB) target of 2%. The pressure is now on the ECB to try and stabilise the Eurozone economy, what with weak growth and low inflation.

The ECB, which has pumped around €2.6 trillion in bond purchases into the struggling economy, recently ceased Quantitative Easing (QE) in December. The ECB has stated that it will delay plans to normalise monetary policy and increase interest rates.

Euro rate prediction

It has been reported that the ECB will offer more cheap loans, in an attempt to boost economic activity. This is not a good sign that the economy is coping well without QE. This situation has the potential to weaken the Euro

Brexit will continue to be the key driver on GBP/EUR and, unfortunately, the situation remains in limbo. I think the likely outcome will be a lengthy extension, which I think would keep GBP/EUR at current buoyant levels. Or there might be a small increase in GBP value, as we take a rushed, botched deal off the table.

If you have a currency requirement I will be happy to assist. It is crucial to be in touch with an experienced broker when the market is currently so hard to predict. If you let me know the details of your trade, I will endeavour to produce a free trading strategy to suit your individual needs. Have faith knowing you will be dealing with a brokerage in business for over 19 years, Foreign Currency Direct Plc.

We are a no-risk entity, as we do not speculate on the market, and we are registered with the FCA. If you have a currency provider, take a minute to send over the rates they offer and I am confident that I can demonstrate a significant saving. I can be contacted at dcj@currencies.co.uk. Thank you for reading.

Daniel Johnson

GBP/EUR Predictions: May to Request Brexit Extension

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GBP/EUR – Although many factors dictate GBP/EUR value, the key driver at present is Brexit. There have been rumours circulating that Brussels may give concessions on the Irish border. This is because the Speaker of the House of Commons, John Bercow, has told May that unless changes are made to her current deal, it will not be put before Parliament for a third vote.

If this is the case, I would expect Sterling to rally on Thursday, and potentially break the 22-month high of 1.1805. However, the UK PM has asked for an extension, in a letter sent to the EU Council President, Donald Tusk. This is now the more likely topic to consume time in negotiations. May is expected to ask for an extra three months, bringing the deadline to 30th June.

Yesterday, the EU’s chief Brexit negotiator, Michel Barnier, said a delay would not be approved “without a good reason”. Barnier urged people to “finalise all preparations” for a ‘no deal’ scenario. He went on: “It is our duty to ask whether this extension would be useful, because an extension will be something which would extend uncertainty, and uncertainty costs.”

Is this just posturing? Or could we now be realistically looking at a ‘no deal’ situation?

Is the Euro going up or down against the Pound?

I still believe the chances of a ‘no deal’ are slim. I would expect Sterling to remain at its current buoyant levels if we are given an extension, while a late deal could push us over 1.20, a key resistance point in the past.

If you are sitting on Euros, waiting for a significant movement in your favour on EUR/GBP, I think you may be betting on a long shot. You are essentially banking on a ‘no deal’. Although the threat is still there, I do not believe either side will allow this to happen. I think if we are facing a ‘no deal’, an extension will be called. If you are sitting on Euros, it may be wise to take advantage of current levels.

If you have a pending currency transfer, let me know the details of your trade, and I will endeavour to assist. There is no obligation to trade by asking for my help, and I will provide a free trading strategy to suit your individual needs. If you do wish to try our service, you can trade in the knowledge we are a no-risk entity, as we do not speculate.

Foreign Currency Direct PLC has been in business for over 18 years and we are registered with the FCA. If you already use a provider, I can perform a comparison within minutes. I am confident I will demonstrate a considerable saving. I can be contacted at dcj@currencies.co.uk.

Daniel Johnson

Buying Euros? UK set for Brexit extension

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Article 50 Extension

UK prime minister Theresa May continues to insist that the UK can leave the European Union with a decent deal, but as we have seen from the recent votes, a deal seems to be a long way off. This week May’s deal failed to go through parliament, her deal being rejected by a total of 149 votes.

Yesterday evening, the House of Commons confirmed that they will voting against a ‘no deal’ scenario, and it seems that we are now destined for an extension to Article 50. This evening, MPs will vote on whether or not there should be an extension, and May will then head to Brussels to request permission from the EU.

At present, there is the risk that Brexit will not be concluded in the near future. May is suggesting that if her deal is not agreed, then an extension could last for the foreseeable.

Is the Euro going up or down against the Pound?

The good news is that a ‘no deal’ is currently off the table. This could give Sterling support in the near term and explains why we have seen gains for Sterling overnight. The Pound actually hit a new high of 1.1805 against the Euro, the best rate since May 2017.

I think there is potential for further gains after tonight’s vote, although the outcome is largely already factored into current levels.

The Euro could be in for a rough ride. The bloc’s third largest economy, Italy, has just entered recession and its debt is second only to Greece. Germany, the engine room of the bloc, has only recently narrowly avoided recession.

Eurozone growth forecasts have been substantially reduced, and the European Central Bank (ECB) has also recently ceased utilising Quantitative Easing (QE). QE is essentially pumping money into an economy in order to stimulate growth. At one point monthly increments were as much as €80 million.

The Eurozone economy has clearly not coped well since they stopped QE and Mario Draghi, the President of the ECB, has now stated that loans will be taken out to pump more money into the economy. This does not bode well for the Euro, although Brexit will continue to be the key driver for GBP/EUR until we have clarity on the situation.

If you have a currency requirement, I would be happy to assist. You need to have an experienced broker on board to take advantage of rates when a brief spike occurs, especially in the current climate.

If you have a currency provider already in place, I am prepared to perform a comparison against them. It will take minutes and could potentially save you hundreds or even thousands of pounds. I can be contacted at dcj@currencies.co.uk.

Daniel Johnson

Euro Rate Forecast: Serious Concerns for the Eurozone Economy

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If you’re looking for Euro predictions, it may interest you to know that the Euro could be in for a tough time, with some major reasons for concern.

Italian Debt

Italian national debt is second only to Greece’s.

Italy’s Finance Minister, Giovanni Tria, believes investor confidence is the biggest problem facing Italy. The third largest economy in the Eurozone has struggled to convince investors that it’s on a sustainable economic path. Since the anti-establishment government came into office in June last year, concerns have risen over Italy’s ability to pay back its debts.

There is concern due to the increase in public spending by the new coalition. Italy’s debt-to-GDP is around 130%.

Tria recently said the following: “I think investor confidence is Italy’s biggest problem. But confidence can be restored. I see a lot of international appreciation for Italy’s industrial system and for our economy. We need to boost our own domestic morale even in the short-term, but I think that our basis is very strong.”

Personally, I disagree with Tria and think Italy’s problems are more deep-seated and will not be easy to rectify.

Last month, the IFO institute released data showing that investor sentiment dropped to its lowest level in four years. Out of the eight countries that were analysed within the bloc, Italy had the weakest level of economic climate.

Italy officially fell into recession last month. This situation could have the potential to cause substantial Euro weakness, should the situation escalate.

Germany could face vehicle tariff. Will this cause Euro weakness?

There is further reasoning why the Euro could face a difficult period. Germany just narrowly avoided recession and, as the engine room of the bloc, this is a serious concern. There are threats from the US to put a substantial tariff on the automotive industry. This would hit the German economy hard and in turn the Euro.

The European Central Bank (ECB) has also recently ceased Quantitative Easing (QE), which is essentially pumping money into an economy to stimulate growth. At one point this was as much as €80 million in monthly increments. Recent data has been very poor and, without the support of QE, they could get worse.

Mario Draghi, the President of the ECB, spoke yesterday following the interest rate decision, which remains at 0%. He said that interest rates would be kept on hold until 2020. He also stated there would be a series of low interest loans to stimulate growth and boost investor confidence.

Growth and inflation forecasts were dropped, with growth predictions dropped from 1.7% to 1.1%

Buying Euros? Impact of Brexit

Despite this negative forecast for the Euro, if you have a trade on GBP/EUR, Brexit will remain the key driver. The probability of a no deal Brexit has substantially fallen and Brussels seems to be making small concessions on the Irish border. This could result in an 11th hour deal or more likely an extension, both of which should result in Sterling strength.

During such unpredictable times, you need an experienced broker on board if you wish to maximise your return. If you have a pending currency transfer, let me know the details of your trade and I will endeavour to assist. There is no obligation to trade by asking for my help, I will provide a free trading strategy to suit your individual needs.

If you already use a provider, I can perform a comparison within minutes and I am confident I will demonstrate a considerable saving. I can be contacted at dcj@currencies.co.uk.

Daniel Johnson

Sterling Euro forecast: Eurozone growth lowest since 2014

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In today’s Sterling Euro forecast, we’ll look at how, if it were not for Brexit, I think the Pound could be making gains against the Euro. I am of the opinion that the Euro could be in for a rough 2019.

The situation with Greece has seemingly been swept under the carpet. Meanwhile, Italy has entered into a recession and is second only to Greece on national debt. Germany is the engine room of the Eurozone and has only just avoided recession.

Also, there is concern regarding the increase in support for right-wing parties in France and Germany. This has the potential to cause political uncertainty and in turn weaken the Euro.

In addition, the situation with US trade should be noted. The Trump administration has made some serious threats including a potential huge tariff on vehicles. This would hit Germany hard due to it’s heavy reliance on vehicle exports.

Let us also look at Quantitative Easing (QE). QE is a controversial monetary policy in which a central bank purchases securities in order to lower interest rates and boost money supply. It has been used on several occasions around the globe, delivering mixed results.

It will be interesting to see how the Eurozone copes without it. The European Central Bank (ECB) put an end to QE in December. It was at one stage up to €80 million in monthly increments.

ECB President, Mario Draghi, has said in the past that QE was working. However, current figures show that the bloc is experiencing the lowest levels of growth since 2014. It will be interesting to see how the Eurozone will deal with the above issues, without the aid of QE.

Is the Pound going up or down against the Euro?

Despite the fragility of the Pound, I think later in the year we could see some gains for Sterling following Article 50.

If you have a currency requirement I will be happy to assist. If you let me know the details of your trade I will endeavour to produce a free trading strategy. During a period of such uncertainty it is important to be in touch with an experienced broker if you wish to maximize your return. We have tools at our disposal to make sure you do not miss out if there is a spike in your favour.

If you already have a currency provider in place, drop me an email with what you are being offered and I am very confident I will be able to demonstrate a significant saving. It will only take you two minutes and I am sure it will be worth your while. You can trade in safety knowing you are with a Foreign Currency Direct PLC, a firm trading for over 18 years and FCA authorised.

If you would like my help, feel free to email me at dcj@currencies.co.uk. Thank you for reading.

Daniel Johnson

Euro weakness could be on the cards, as Catalan trial starts

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We may be looking at Euro weakness in the near term. First, the bloc is currently experiencing the worst growth since 2014. Italy has just entered a recession, while the engine room of the Eurozone, Germany, has just narrowly avoided recession.

Spanish Trial could cause a drop in investor confidence in the Euro

The situation in Spain should be watched closely. The trial of 12 Catalan separatists has begun. They are in court following a Catalan independence bid that was deemed illegal in 2017.

The Spanish government is playing a risky game and only has a slim majority in pursuing this trial. They risk pushing away Catalan separatist parties that have supported the government in a coalition.

This has the potential to cause an early election which could be as soon as April. This would no doubt be a cause for concern amongst investors which in turn could create Euro weakness.

Euro rate forecast: gilet jaunes may weaken euro

There is also a worrying situation in France. There is rising popularity in France for the gilet jaunes, which is combining with a drop in popularity for Macron. The elections in May could prove interesting and will no doubt create volatility in the euro exchange rate.

In addition, there is the situation with Greece, which is seemingly being swept under the carpet, plus the ongoing trade war with the US. The Trump administration is threatening an increase of 25% in tariffs on cars. This would hit the Eurozone hard, particularly Germany.

Quantitative Easing (QE) which is essentially pumping money into an economy to stimulate growth, has recently ended in the bloc. Vast sums, at one stage in excess of €80 million a month, was going into the Eurozone, with seemingly little effect. With QE now cut to zero, it will be interesting to see how the Eurozone copes.

Pound to euro rates: lack of Brexit clarity weighs on Sterling

Unfortunately, the lack of clarity surrounding Brexit is still outweighing the Eurozone’s troubles. The next key date on Brexit talks is 26th February, when May is due to put forward her new proposal for Brexit, hopefully with concessions from Brussels. Be aware that Brussels have consistently said there will be no changes to the current deal. So sterling could face further losses in the short term.

If you have a currency requirement I will be happy to assist. It is crucial to be in touch with an experienced broker if you wish to maximise your return. If you let me know the details of your trade I will endeavour to produce a free, no obligation trading strategy for you.

If you have a trade to perform I will also happily provide a free quote and I am confident our rates are among the best in the industry. I would be willing to demonstrate this in the form of a comparison with any competitor. You can trade in safety knowing you are dealing with an FCA authorised company, and one that has been trading for over 18 years, Foreign Currency Direct PLC.

If you would like my assistance I can be contacted at dcj@currencies.co.uk.

Daniel Johnson

Euro Rate Prediction: Worrying Times Ahead for The Euro

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In today’s Euro rate prediction, we look at the backdrop that the Eurozone is currently experiencing its worst growth since 2014.

The Euro, although still looking good against Sterling, could be in for a rough year. Mario Draghi, the head of the European Central Bank (ECB) has tried to ease investor concerns by lauding the current impressive employment figures in the bloc.

However, there are serious concerns. Germany, the engine room of the Eurozone has just narrowly avoided recession. Also, Italy has just entered a recession.

Italy’s growth figures were down by -0.2% in the final quarter of 2018 following a -0.1% decline in the third quarter. Italy’s debt is now second only to Greece. Greece, another huge economic problem for the Eurozone, has seemingly been swept under the carpet.

How will Eurozone cope without quantitative easing?

There are ongoing trade wars which threaten the global economy. In addition, the ECB have just put an end to Quantitative Easing (QE).

QE is essentially pumping money into an economy in order to stimulate growth, The ECB had been pumping upward of €60 million per month into the bloc, in an effort to stimulate growth.

QE has always been a controversial form of monetary policy, as it amounts to a huge amount of debt and the impact can be limited. With growth being the desired result, it seems the latest QE plan has failed.

Current growth data in the bloc shows the lowest growth figures since 2014. It will be interesting to see how the Eurozone copes without QE, which ended in December.

Pound v Euro forecast: Sterling remains fragile

If it were not for the lack of clarity surrounding Brexit, I think we would be seeing the Pound making gains against the Euro. Unfortunately though, Sterling remains fragile.

UK Prime Minister Theresa May is in a very weak position to negotiate. Parliament has stated that it is willing to give Mrs. May’s deal the O.K, provided she gets certain concessions. However, Mrs. May still has to gain these concessions from Brussels, which will be no easy task.

It is important to remember that Mrs. May decided to postpone the first vote in Parliament on her deal. This is because it was common knowledge that MPs were unhappy with the deal in its current form.

Mrs. May then went back to Brussels and was stonewalled. European Commission President, Jean Claude Junker, has stated on several occasions that there will be no changes to the current deal. Essentially, it is take it or leave it.

Best time to buy euros?

The reason for Sterling’s recent spike was due to the dropping probability of a “No Deal” scenario. Morgan Stanley give less than a 5% chance that a “No Deal” situation will occur. “No Deal” is May’s only form of ammunition. With this scenario now less likely than in December, she stands less of a chance of gaining the concessions required.

Many are of the opinion that we may only get a deal at the 11th hour. This is a risky business, considering these are the most important negotiations for the UK in over 50 years.

The other option is an extension while terms are hammered out. An extension could well be beneficial to the Pound. This is because the extended time period would help get deals in place, and take the pressure off getting something in place by 29th March.

Sterling will remain fragile until we get some form of clarity on Brexit.

If you have a currency requirement I will be happy to assist. It is crucial to be in touch with an experienced broker when the market is currently so hard to predict. If you let me know the details of your trade I will endeavour to produce a free trading strategy to suit your individual needs.

Have faith knowing you will be dealing with a brokerage in business for over 18 years, Foreign Currency Direct Plc. We are a “no risk” entity as we do not speculate on the market and we are registered with the FCA.

If you have a currency provider, take a minute to send over the rates they offer and I am confident I can demonstrate a significant saving. I can be contacted at dcj@currencies.co.uk.

Daniel Johnson

Is the Eurozone facing a Recession? (Daniel Johnson)

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Draghi blames drop in growth on global economic slowdown

Economic growth in the Eurozone has now slowed to its lowest point since 2014. Purchase manager index forecasts do not make pleasant reading either which points toward further falls in business activity in 2019.Forecasts suggests growth has the potential to drop below 1.5%.

The President of the European Central Bank (ECB), Mario Draghi has played down talks of a recession blaming the economic downturn on exterior factors such as  trade wars and a global economic slowdown. When recently questioned about the fall in GDP he said the following “the threat of protectionism, vulnerabilities in emerging markets and financial market volatility”.

He has attempted to ease investor concerns by stating the chance of a recession within the bloc is low and the labour market is the strongest it has been in years. Eurozone unemployment currently stands at 7.9% the lowest in over a decade.

I do not share his optimism. There is still the problems in Greece which is seemingly being swept under the carpet, Italian debt is now second only to Greece and the engine room of the Eurozone, Germany has just narrowly avoided a recession.

It is also yet to be seen how the Eurozone will cope without Quantitative Easing (QE). QE is essentially pumping money into an economy in order to stimulate growth. Monthly increments were at one point above €60mln, with the ECB putting an end to QE in December it will be interesting to see how the bloc will cope with growth at such a low level already.

If it were not for Brexit I think Sterling could be making impressive gains against the Euro. Looking at GBP/EUR in detail the fragility of the pound is again being displayed , dropping form an 18 month high of 1.1602 to the low 1.14s today. I am afraid Theresa May could have a very tough time getting any concessions from Brussels. Jean Claude Junker, European Commission President has stated on serval occasions there will be no changes made to the current Brexit deal and with Morgan Stanley suggesting there is less than a 5% of a no deal scenario May has no ammunition in talks.

I think we could see further losses for Sterling despite the problems in the Eurozone.

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