Euro Forecast: How will the Euro perform for the rest of January?

The GBP/EUR exchange rate wandering near opening levels

The Euro has been weaker during a volatile week for many currencies, in particular the pound which has pushed and pulled the Euro. Investors have been keeping a close on events in Europe and the United Kingdom, to monitor developments. The Euro has been slightly weaker as the currency markets have concern over political and economic concerns in the Eurozone too.

Most importantly, investors are concerned over the measures to withdraw economic stimulus by the ECB, European Central Bank in December. This had seen the Euro stronger but there was a feeling the policy might hit some speed bumps in the year ahead and cause the Euro to weaken. Today we have the latest Inflation data which will be keenly watched for investors to assess the latest performance of the Eurozone economy. Investors are concerned that we might see the Euro begin to weaken if the economic data does not match the expectations we have seen set by the Eurozone’s central  bank.

Political concerns are also important as the currency markets have to price in the possibility of future deterioration of Macron’s position in France. If  Macron continues to remain unpopular we might well find confidence slips further which would only see the Euro weaker. Investors are concerned that the direction of European politics could set the Eurozone on course for more populist, anti-EU parties which might ultimately seek its break-up. This would not bode well for the Euro currency and should be a future concern for any clients holding Euros.

Overall, the Euro is holding firm and remains at strong historical levels against many currencies. This is largely because of the good progress showed by the economy in recent years and could well continue. Investors will however continue to require proof this is ongoing and the political tensions in France, and worsening economic data from Germany are all contributing to a much more mixed picture that could ultimately see the currency weaker longer term.

The UK’s political situation is also nerving investors and the recent events in the UK which have seen sterling higher, have pushed GBPEUR levels back over 1.13. This might well prove short-lived with many commentators predicting the pound will still be in for tough times ahead.

If you have a currency transfer to buy or sell then it is well worth checking in to make sure you are fully up to date with this market and all the factors to move your rate. Please do feel free to contact me Jonathan Watson directly on jmw@currencies.co.uk, to learn more.