The Euro is down more than two and a half percent against Sterling in the last month. To the untrained eye, this may not seem like very much, but in the big picture, this is akin to a slaughter of epic proportions. On the surface, the move should probably not be interpreted as the strength of one, but rather the weakness of the other. So, what’s wrong with the Euro?
Rather than wading into the raison d’etre of a monetary union of sovereign states with different fiscal policies, it does seem that Macron’s election gamble may have something to do with it. Of course, it doesn’t help that Germany has been systematically dismantled by a coalition of idealistic incompetents, and there really is very little to like about the Eurozone’s growth outlook.
From a technical standpoint, things don’t look much better. There is a trend line that supported the exchange rate for twenty four years, which has now been broken. The only other time this has ever happened before was, you guessed it, during the Brexit referendum. Could it be that we are witnessing the great unwind of that, which came about, because Boris wanted to become prime minister?
With the Tories divided, the Lib Dems daring to mention that which shall not be named, and Labour almost certain to win the elections, the markets are certainly giving us some early signs that things might be moving. If Britain were to move closer to Europe and Sterling retraces some of the losses it suffered from leaving, the rate of exchange could easily be 10% higher from here, and England will win the Euros.
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