It’s thought amongst different political observers in Germany that the talks have not progressed at a sufficient pace and there is unlikely to be a coalition formed before the 1st April.

The three major parties around the table just appear to be looking for different things, with radical changes on how the Government makes decisions being a focus.

Angela Merkel is still the leader of the largest majority however the opinion polls before the German election last year saw nearly half the country suggest she was not fit to lead.

Germany is the main powerhouse of the Eurozone with European issues one of the main factors even in domestic politics. The bailouts of Greece and Italy have essentially come from German funding and when the UK leaves the EU Germany may well be left picking up the bill.

Martin Shulz who leads the Social Democratic Party, who finished second, called for the next German Government to be tough on the UK and not give ground. It’s worth noting also following his previous coalition with Merkel he refused to join parties again, but changed his mind to protect the EU’s interest (last year he was President of the European Parliament).

As of yet German talks don’t appear to be playing too much on investors minds as economic performance remains strong in the Bloc, but as different opinions domestically form on Germany’s role in the EU the Euro could start to suffer from uncertainty.

Eurozone Economic Data Tomorrow

Tomorrow Gross Domestic Product (GDP) data, Consumer Confidence and Business Confidence data will be released for the EU. The GDP data for quarter four is expected to stay at the same level at the previous quarter. The Consumer and Business Confidence readings are expected to remain near record levels, which last year was one of the highlights of the Eurozone’s economy.

At the moment the Euro continues to trade at good levels against Sterling and multi-month high levels against the US Dollar. However, in my opinion the EU’s method of sweeping problems under the rug cannot continue and the Euro could start to give up last years gains.