After the conclusion of the German election this weekend the Euro’s weakness continued into the close of the today. Despite the fact Angela Merkel won the vote as planned, the majority she won was her worst performance yet. Chancellor Merkel won her fourth election in a row, however with only 30% of the vote there is not enough support to form a majority government. Therefore, over the next few months the German Chancellor may have to negotiate with as many as three other parties in order to create a ruling government.
In the UK we recently saw the uproar and the difficulty that can be caused with forming a coalition. The Euro could be in for a rocky few months as the main economic powerhouse for the region, Germany, suffers from major uncertainty. The Eurozone has been moving from strength to strength in the past few months and now there could be cause for concern.
The far right party in Germany, Alternative for Germany have received over 10% of the vote and will have 88 representatives in Parliament. The reason for the right wing party’s success appears to be due to the amount of refugees that were let into Germany last year following the Syrian crisis. Germany took in 1 million new citizens, which caused anger, with many Germans choosing to use the election to cast a protest vote. Considering the AfD have some strong policies that many will not agree with, there is likely to be some fiery debates in the German Parliament.
Now that the election in Germany is over it might not be long before the GBP/EUR rate moves back above the 1.14. This would be the first time in over 2 months and may well be a good time for anyone looking to purchase Euros to act.