Is a Eurozone crisis around the corner?

Euro to Pound to be influenced by UK Unemployment data

The Euro exchange rate has been weaker in the last few weeks as investors concerns over the outlook on Italy intensifies. Financial markets still bear the scars of 2010-2014 when there was a growing concern Greece would leave the Euro and we may possibly have seen major negative outcomes on the Euro. Let me be clear, I do not expect the Euro to collapse or Italy to leave the Euro, but it is widely accepted these issues were never properly resolved. Could another crisis be just around the corner?

Italy is proposing to spend its way back to economic prosperity quoting Donald Trump and his economic plans as an example of what is best. This has worried investors as to what direction the Eurozone economy will take, Italian GDP was recently confirmed as 0% for Q3, stoking fears the outlook could be rather shaky ahead.

There is now a deadline to complete this by the 13th November where the market will eagerly await the latest news to see if Italy or the EU will capitulate first. Whilst the Italian budget deficit is within Eurozone rules, it is well beyond the previous plans Italy were working towards and represents concern over the future direction of the Italian and also the Eurozone economy. With Angela Merkel stepping aside and other fractions across the continent on immigration and economic matters, the Euro could lose value if investors become fearful once again.

The Euro is still at historically strong levels against many currencies owing to the expectation the ECB, European Central Bank will raise interest rates in 2019 and finish their QE, Quantitative Easing program this year. However, the ongoing trade spat with the US, the concerns over Brexit and these internal issues could also threaten these intentions and see the Euro weaker.

If you have a position buying or selling Euros there are many key issues that could significantly drive the levels in the weeks ahead. For more information on the latest news and events to move your position, please feel free to contact myself Jonathan Watson directly on jmw@currencies.co.uk.

Thank you for reading and I look forward to hearing from you.