Euro Advances on Pound, Dollar as SPD's Shulz Throws Merkel a Lifeline
Above: Angela Merkel, image (C) European Council.
The Euro is firmer against both the Dollar and Pound Sterling on news reports that Germany's political limbo might soon come to an end.
Reports on the newswires have confirmed the SPD party are looking to reverse their aversion to forming an alliance with Chancellor Angela Merkel's CDU/CSU party to reform the 'grand coalition'.
The news suggests Merkel might now have a shot of forming a stable and lasting coalition, ending weeks of uncertainty over the matter.
The combination of the CDU/CSU's 246 seats with the SPD's 153 seats would give the coalition a comfortable majority in the Budestag.
*GERMANY'S SPD IS SAID TO BE OPEN TO TALKS ON MERKEL GOVERNMENT
— Michael Hewson ???????? (@mhewson_CMC) November 23, 2017
The news should certainly be good for the Euro over the longer-term as it provides a sense of certainty with regards to direction in Europe's larget prospect.
SPD leader Martin Schulz intends to tell President Frank-Walter Steinmeier of his shift when they meet Thursday, it is being reported; Schulz could back Merkel in a minority government, but he won’t offer another grand coalition.
Schulz told Deutsche Presse-Agentur he’s sure a “good solution” can be found. “The SPD is completely aware of its responsibilities in the current difficult situation”.
The SPD initially ruled out forming a coalition or working with Merkel following their poor showing in the recent elections in an attempt to rebuild their standing amongst voters.
It also opens the door once more to the prospect of closer European integration; something Euro bulls are looking for as a thematic underpinning to a stronger Euro.
We have reported here, if Merkel is unable to form a coalition with any of the other parties, the prospects for the Euro and the Eurozone are a little more concerning.
“We think that markets are underestimating the risk of new general elections in Germany, which may be called for early next February,” says Chiara Silvestre, an economist at UniCredit Bank.
At the time of writing the Pound-to-Euro exchange rate is at 1.1250, having been as high as 1.1275.
The Euro-to-Dollar exchange rate is at 1.1845, having been as low as 1.1813 earlier in the day.
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