Euro forecast: EU GDP outlook cut, EU Parliament elections

EURUSD: European Central Bank Expected to Act on COVID-19

For today’s Euro forecast, we’ll see how, yesterday, the Euro lost ground against many of its counterparts, following news that the EU (European Union) has cut its GDP (Gross Domestic Product) forecasts. Part of the reason for the cut in the forecasts is the ongoing trade war concerns, which the EU highlighted as a reason for the predicted fall in the economic outlook.

The rise in concern over the outlook is because US President Donald Trump and others have made public that they do not feel that trade talks with China have been going as well as expected. There had been an underlying optimism the trade disputes could be settled, but this has faded quickly over the weekend.

The trade wars are a concern for Europe because, not only is Mr. Trump looking to negotiate new deals with the EU, but also because lower global demand is harming the EU’s exports. A notable example is the automotive trade, where US and Chinese consumers are big purchasers of BMW, Audi and Mercedes Benz.

There are also concerns ahead for the political outlook in Europe, as the European Parliament elections loom. More extreme and populist parties are predicted to make gains against the incumbent centre-socialists. Rising anti-immigration sentiment and concern over domestic issues in each member state, are leading to a breakdown of the more historic centrist governments which have led Europe.

Should I buy Euros now or wait?

The 23rd May is the date of the European Parliament elections. This promises to be a turbulent time, as the market digests and price in the latest news. I expect that the continued uncertainty ahead will continue to reflect badly on the Euro, with the possibility of further losses quite high, in my opinion.

Of course, some currencies, like Sterling for example, are in no position to capitalise. The recent strength of the Pound against the Euro could easily dissipate, as investors become concerned over the outlook ahead for Brexit.

If you have a transfer buying or selling Euros against any other currency, please feel free to contact me, Jonathan Watson, directly, to discuss the latest forecasts and sentiments to be aware of. Thank you for reading and I look forward to hearing from you, jmw@currencies.co.uk