Euro to Pound: Further EUR Weakness to Come?

Euro Exchange Rate Forecast – Volatility ahead for EUR?

A proportion of the weakness we’ve seen in the euro to pound exchange rate could be attributed to some negative economic data sets witness recently. Yesterday confirmed suspicions about the degrading financial health of Germany as Industrial Production fell from its previous recording last month of -8.9%, to Monday’s reading of -17.9%. This two-fold contraction may have hit the Euro strength significantly as Germany is widely regarded as the economic powerhouse of the EU as so can be sensitive to rate volatility if figures come in poorly.

Further releases that may shape the strength of the Euro may lie in Europe’s GDP Q1 that is released later today. Previous recordings of this release stood at -3.2% year-on-year with today’s figure expected to remain unchanged which would likely cause a non-event in the currency markets. However, this release is a very telling sign of the economic state of a country or region and so any deviations away from predictions may cause some currency movement later on today.

Contact your account manager at Foreign Currency Direct today to stay on top of the latest economic data and exchange rates 014943 725 353.

Positive Report But Pandemic Still in Early Stages

With 2020 being a year with a lot of negative news releases stemming from the global pandemic and the more recent Black Lives Matter protests, it would be good to balance out the doom and gloom with some more positive news showing how much good has been done so far this year. Today, the Imperial College of London released a report stating that based off of what is called “disease modelling”, the European lockdowns have saved roughly 3mn lives so far. The results were taken from the evaluation of 11 European countries comprising of Austria, Belgium, Denmark, France, Germany, Italy, Norway, Spain, Sweden, Switzerland and the UK. Of these nations, a predicted 470k were saved from the UK, 690k in France and 630k in Italy. Whilst the news can almost be a pat on the back to governments for preventing further loss of life, social distancing and other measures will likely remain unchanged in the long term and therefore, in-keeping with these requests is vital for continued success against the outbreak.

“Frugal Four” at Loggerheads with EU Over Recovery Fund

The Eurozone’s €750bn recovery fund’s progress could certainly be likened to that of Brexit in the UK with the way that breakthroughs and stalemates so readily follow each other. The previous issues surrounding devising up the budget emanated from France and Germany not wanting to provide the funds as grants as opposed to loans has been smoothed over. The next obstacle has been from the so called “frugal four” which comprising of Austria, Denmark, Netherlands and Sweden who have openly discussed that they are uncomfortable with the idea of having to bail out poorer EU countries following the damage caused by the Coronavirus. When the emergency relief fund was initially proposed there were concerns that the great disparities between neighbouring EU states would cause disagreement and unrest and more problems seem to be created than solved. With these four nations being some of the more prosperous in Europe as well as not being as heavily affected from the virus, the Eurozone is at loggerheads again in unanimously agreeing the best path to alleviate the economic disruption that the pandemic has amassed.

Regardless of this uncertainty, former Finish PM Alexander Stubb believes that just like previous hiatuses in progress, the four nations will concede to a fair agreement and continue Europe’s solidarity that has been seen in recent weeks. The lack of clarity that the EU currently faces has been shown in the currency market with the GBPEUR mid-market exchange rates gaining over 1.5 cents in the last 5 days alone to the current 1.127 at the time of writing. EURUSD has also fallen in the last 4 days with mid-market dropping a cent to 1.124. This is a big turning point for the currency pairing as the previous two weeks before that the EURUSD gained 4 cents up to a 3-month high of 1.133.

Get in touch using the form below to discuss how these factors are likely to continue impacting euro exchange rates in the coming weeks.