The Chancellor Philip Hammond provided his Autumn Budget this afternoon, which as expected had little effect on currency markets. The main offering from the Chancellor was the removal of Stamp Duty for first time buyers which is designed to help millennials get onto the housing market. However, there are now already concerns that it could just lead to house prices rising as demand starts to increase.
German Political Negotiations Strengthen Sterling
Angela Merkel following the breakdown of coalition talks after a failed election at the end of September has raised her concern about who might be Germany’s bets leader. Merkel suggested that Germany could end up with a Trump equivalent which is not what they need in a time of high tensions. Merkel’s support has dwindled since she chose to allow 1 million refugees into Germany with many seeing the decision to support the EU and not Germany.
Now that there is not thought to be a deal the Germans could be going back to the polling stations; however, many are sceptical that in the space of two months much will have changed. Merkel is likely to still win however we could well see some further advancement from the right-wing minority.
From the perspective of Sterling this could help to see some major gains against the Euro. Across the continent there are pockets of people who appear to be against the EU and are hoping for changes. Germany being the powerhouse of Europe could well set a trend for the rest of Europe and more importantly from a financial perspective if Germany have a government less focused on the EU things could become unsettled.
In short, the Eurozone could be about to enter a volatile patch which could finally give people looking to buy Euros some good rates. As we move closer to Christmas and a potential re-election in Germany the GBP/EUR exchange rate could move back towards 1.15.