The Pound has made minor advances against the Euro this week, but could crash back to earth in early March when the UK’s Spring Budget is announced.
Delivered by Chancellor Philip Hammond, the budget is not expected to cause much cheer, with the focus being on the struggling NHS and social care systems.
EY Item Club economists predict that more tax hikes or borrowing drives are needed to keep institutions like the NHS afloat, while already austerity-battered sectors are expected to be further damaged by more cuts to public spending, potentially into the 2020’s.
If these pessimistic predictions come true in the incoming budget, then the Pound is expected to drop sharply against the Euro and could remain in a softened state for an extended period.
In the somewhat unlikely event that Hammond feels like easing up on the purse strings after the recent record low in Government borrowing, however, then the Pound Euro exchange rate may well rise.
With 2017’s Eurozone election season now getting underway, the upcoming Dutch general election on March 15th is set to be the next major Euro-moving event.
While generally seen as a minor precursor to the more high-impact French and German elections later this year, the Dutch vote is nonetheless being considered as a litmus test for how the year’s big Eurozone votes might turn out.
The present struggle is between the Eurosceptic Party for Freedom (PVV) and the more unity-based People’s Party for Freedom and Democracy (VVD); polls have recently put both parties at a level heading.
Statistics from Peilingwijzer have put the PVV winning a maximum of 28 seats, compared to the expected 27 for the VVD.
The Euro could appreciate if the PVV continues to shed predicted seats as the election draws closer; the 28 estimate is already a step down from a forecast for 35 seats in January.
On the actual eve of the election, the Euro may be subject to high volatility, owing to polling data and predictions giving way to raw uncertainty as Dutch citizens cast their ballots for the next ruling party.
Recent Interbank GBP EUR Exchange Rates
At the time of writing, the Pound Euro (GBP EUR) exchange rate was trending in the region of 1.18 and the Euro Pound (EUR GBP) exchange rate was trending in the region of 0.84.