James Trescothick

Education Manager at easyMarkets. Passionate about the markets, the excitement, the story driving the markets at the time, the fundamentals and even the technicals.

A certain US President may be hugging all the limelight with global media these days, but there are several other potential political upsets building up in Europe.

Any trader worth their weight of gold should be aware that we have the beginning of Brexit negotiations, more woes for Greece and at least three major elections which have the potential to reshape the European Union (EU).

To start off, a familiar name is back, Greece. The debt driven country seems to be making a comeback of its infamous financial battle with the EU starting from 2012, and so the saga continues. On the 20th of February, the Eurogroup will meet and one of the key areas they will be addressing is approving a second round of Greece’s bailout reforms, so that they will be able to release the next trache of money. Athens is in desperate need of this cash injection to repay its 8 billion euro debt, due in July. The last attempt for a bailout did not end in Greece’s favor, as EU officials felt that not enough progress had been made by the Greek government on their policy reforms. This February there is hope that Greece will get the bailout, but either way, considering Greece is a part of the Eurozone, this will potentially influence its shared currency, the euro.

Up next is of course the UKs exit from the EU. Even though it has been slightly overshadowed by what has been happening across the pond, this news is still a big player in the market and cannot be overlooked, especially now that the reality has set in that Britain will indeed leave the EU. The next step in this process is for London to officially notify Brussels of their intentions by invoking Article 50. UK Prime Minister Theresa May has said she intends to do that by the end of March, UK national newspaper “the Times” believes it could happen as early as March 9th. With only the House of Lords now standing in the way of the UK Government’s Brexit Bill, whether Article 50 will be triggered by that date is yet to be seen. Regardless there is potential for further volatility for the Sterling, once Article 50 is set in motion and then negotiations between the UK Government and the EU on Britain’s exit will convene, and expectations are it won’t be an easy divorce.

Another thing bypassed by the media would be the upcoming general Elections in Holland. The reason why this news is gaining momentum is because with pressure on current Prime Minister Mark Rutte due to the recent scandal involving his Justice Minister and payments to a known drug smuggler, many political analysts believe that Dutch’s very own populist Geert Wilders who is a leader of the far-right Freedom Party could indeed win the elections. Why is that interesting? Because he is anti-immigration and anti-EU, which means if he does indeed win, Holland may very much be on its way to leave the Eurozone and the EU.

Carrying on with the theme of exiting the EU, comes the little talked about but still very real threat of the ‘Frexit’. France is the EU’s second biggest economy and just like Holland it has its very own populist candidate, currently leading the polls, a Ms. Marine Le Pen, the leader of the far-right National Front. Le Pen has not held back on her opinions on the EU with even describing the Brexit as the most important even to have happened to Europe since the fall of the Berlin Wall.  Considering France is Europe’s second biggest economy, there is a growing fear that if Le Pen does indeed win the presidency, then her plan to take France out of the Euro could potentially mark the beginning of the end for the EU. Things will become clearer as first election round takes place on April 23rd, if she doesn’t win a majority, another vote would happen on the 7th between the top two candidates and that may mean, more voters moving towards her second-round opponent.

Last but not least is the country which has an exit name very different from the one’s we’ve already mentioned, and that’s Quality. Italy technically does not have an election due until 2018, however there are many analysts who believe there is a chance of a June ballot after Italy’s Constitutional Court struck down parts of the electoral law in January. As with most upcoming elections in the EU, the country’s populist 5 Star Movement has becoming louder which means, you guessed it, there is a chance this could lead to an Italian departure from the bloc.

2017 is shaping up to be the “The Election Year”, with several elections lined up, including Germany’s elections in September. This could indeed signal another year of surprises and turmoil to the markets, which is why we should all be aware of more than just the an orange colored POTUS!

 

http://www.bbc.com/news/world-europe-38915466

http://www.thetimes.co.uk/edition/news/may-will-trigger-brexit-on-march-9-7tnnndgw0 

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