What French election and Italian referendum mean to the Euro?

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How Will Upcoming Political Events Determine The Future Of European Currencies?

Brexit and Trump are perfect reflections of the level of influence major political events have on national and international currencies. Europe has primarily borne the brunt of it all with the economically-threatening Brexit process and the ensuing appeals and counter-appeals. The highly contested American election and the subsequent election of Trump that resulted in a dollar skid may have come as a relief to these currencies. But this won’t last long as France’s biggest election contender threatens to tear the currencies further with another exit referendum.

What the France election and Italian referendum mean to the Euro?
It all started with Brexit that dealt a major blow to the sterling pound plummeting it to record lows against other major currencies in the world. Nonetheless, several factors in the recent political events that shook up global economics acted in its favor and led to a constant depreciation of the Euro. For instance, with much uncertainty surrounding the Italian referendum, the Sterling was able to achieve the highest exchange rate since September last week. And this didn’t improve with the No win against the constitutional reforms as the Sterling continues to outshine the former mother-currency, Euro.

The situation is aggravated further by France’s leading presidential campaigner’s session calls from the Union. With her popularity growing every day and with the Brexit scars still fresh in investors’ minds, most are now turning casting a shadow of doubt on the future of the union. This also means doubting the future of the currency especially since Britain and France make up the key members of the union.

Recent reports by analysts from France’s third large bank Societe Generale intimate that the Euro will continually weaken throughout the country’s campaign period. Nonetheless, recent polls reflect slim chances of Pen ever making it to the presidency, though they approximate she might get through to the second phase of the presidential race. But investors won’t hear any of these, and most are making bearish moves as they fear to witness an American-style election twist that defied polls. Euro’s recent poor performance may, therefore, be a warning sign of tumultuous times ahead.

Recovering in 2018
Initially, the Euro was only expected to take its current nosedive in the face or the Sterling in early 2017 as the France elections draw near. But the unreliability of the current polls and recent political events in Europe may have contributed to investor’s loss of faith in the currency. Such uncertainty’s, therefore, gradually scaring away buyers from the Euro and analysts warn that this may continue till after the elections.

However, all isn’t lost as analysts argue that the Euro will gradually recover after the election and loss of Le Pen or break from the referendum stance. But they still warn that the Euro will only regain full recovery against most currencies in 2018 during the elections of the politically stable Germany. Whether it will be able to topple the Pound from its current prestigious position after at the time remains to be seen as Britain is expected to have shed off the last European Union shell and on a fast pace towards promising reconstruction of the economy.

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