The EUR has come under pressure over recent weeks but is still finding support under 1.20 against Sterling for the time being.
This negative was intensified following the resignation of Italian Prime Minister Matteo Renzi earlier this week, following Italy’s NO vote to constitutional reform. This caused the EUR lost value following the political uncertainty this vacuum has now created.
This decision to step down has left Italy facing an uncertain future and this is always a negative for the currency in question. Pressure is likely to build on the EUR over the coming days, with the only silver lining for those clients holding the single currency the uncertainty over the UK Supreme Court ruling regarding our Brexit, which could handicap any further Sterling advances in the short-term.
The EUR has been riding the crest of a wave ever since the UK’s decision to leave the EU but there are signs that the winds are changing and the current negative trend may be a sign of tougher times ahead. Key figures in Brussels will not have enjoyed watching the Italian referendum results come in and with the likely uprise of the far right 5 Star movement, it is only likely to intensify these fears.
It does feel as though the anti EU groups and feelings amongst the general public are starting to gather pace and with political elections in France & Germany next year, the political and economic landscape inside the Eurozone could be drastically different in 12 months’ time.
We also need to consider the European Central Bank’s (ECB) stance, as this will have a huge influence over EUR exchange rates. The ECB are likely to extend their current monetary policy (QE) programme beyond the current deadline of March 2017 and this is hardly likely to boost investor confidence. Personally I would not be prepared to gamble on further EUR improvements and it may be wise to protect the huge gains made over the past six to nine months.
If you have an upcoming EUR currency exchange to make and you are concerned by the increased market volatility of late, it may be wise to look at protecting the gains you’ve made, or limiting your losses with one of our forward contracts, rather than gamble on what has become an increasingly volatile and unpredictable market.
If you would like to be kept up to date with all the latest market movements ahead of your currency exchange, or simply wish to compare our award-winning exchange rates with your current provider, then please feel free to contact me on 0044 1494 787 478 and ask one of the team for Matt. Alternatively, I can be emailed directly on email@example.com