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euro

There have been arguments that the euro is set to get stronger in comparison to other currencies (especially the dollar and pound) in the medium term.

The key fundamental reason given for this is that Europe is exiting lockdowns sooner. In addition, the total package of government spending is smaller as a proportion of their economy.

On the other hand, detractors argue that tensions between the north and south have been exacerbated by the coronavirus outbreak, leading to potentially more political friction.

A key element in resolving this issue is how fast consumers return to the market. If people rush back to the shops from pent-up demand after a 2-3 month lockdown, we could expect a faster economic recovery.

This would likely benefit the euro in the near term. Europe was the first to suffer from the pandemic compared to other developed countries. Therefore, it should be the first to overcome it.

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