Euro poised ahead of German vote

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waterman
Written by Dan Waterman
March 18th 2025
Europe's largest economy steps into a new paradigm..

Germany is today voting on a change to its constitution that will likely see it make €1 trillion available to be spent in the next decade. The 'sleeping giant' has been lying dormant with its finances since the 2008 global financial crisis, but the fiscal straitjacket is about to be ripped off.

Investor confidence in Germany is at the highest it has been since January 2023, the DAX is up 2.5% in the last month versus the S&P 500 which is down 7% and the Euro is trading at its highest level since October across the board (January versus Sterling).

This has prompted Goldman Sachs to raise its Euro forecast and turn bearish on £-€. Previously, the investment bank were forecasting that GBP v EUR would hit 1.26 by the end of 2025 and now they expect it to be possibly 10-cents lower

Elsewhere, financial markets have welcomed a 'not very Labour-like' decision to cut spending on welfare in the UK. A rather tidy sum of £5 billion per year is expected to be saved by the change, which would create much needed headroom for Chancellor Reeves. 

Finally, we will hear news of the phone call between Presidents Trump & Putin later today, as they discuss a possible ceasefire and the ending of the Ukraine/Russia war.