The Euro could find itself under added pressure as the trade wars stemming from the US and China continue to escalate. This is relevant to Euro exchange rates as the EU has also been drawn into the trade disputes. Donald Trump has repeatedly singled out Germany for its large volume of exports into the US whilst not allowing agricultural products from the US to move into the EU. Only yesterday Donald Trump slapped on 10% tariffs on a further $200 billion of Chinese imports creating more tensions. If the US pushes further with more tariffs on the EU then this could prove negative for Euro exchange rates going forward.
EU Consumer Price Index inflation numbers are released this morning and could create some volatility for Euro exchange rates. Any improvement in the data is likely to see the Euro make gains although considering the recent stance and strong forward guidance form the European Central Bank it means that any gains are likely to be limited. With no interest rate increase expected within the EU until at least December 2019 this is likely to prevent any major Euro strength.
Those clients looking to buy Euros with pounds are likely to see a volatile day with the eagerly awaited release of the Brexit white paper today. The detail offered is likely to cause tensions within the government following those high profile resignations within cabinet at the start of the week. Any clarity as to where exactly Brexit is heading is likely to help direct the price of sterling. Any further resignations are likely to see further weakness for sterling exchange rates as the prospect of a no deal scenario or hard Brexit could become more likely. So far there have been 4 conservative resignations including the Foreign Secretary and Brexit secretary. There is support to try and see the Chequers deal that was agreed last Friday thrown in the bin and amendments are expected to be put forward to make life difficult for the prime Minister added further uncertainty for the pound.
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