There are many reasons that support the optimistic forecasts for the single currency. That's what says chief currency analyst at HSBC David Bloom and his team.
The median forecast from a survey of 70 economists conducted to Reuters, shows that the euro by the end of the year may be at the level of $ 1.08 and a decrease of 3% compared with the cost of $ 1.11, reached late on Wednesday in New York. After the referendum value of the currency has It fell by nearly as much. Like many on Wall Street, HSBC lowered its forecast for the euro-dollar pair to the end of the year after the voting, believing that «Brexit» reduce exports from the euro zone and the UK will encourage France and the Netherlands to hold their own referendums. But Mr. Bloom and company think that betting on the fact that the euro will weaken further is wrong. Since voting euro EURUSD exchange rate fell against the dollar and rose against the pound EURGBP and many currencies of its trading partners in Central and Eastern Europe.
The surplus of the euro area current account
Sometimes, the outlook for the currency is reduced to a simple accounting - Bloom said. The British pound suffered in part because of the huge current account deficit. The UK economy relies on the flow of foreign capital to meet funding needs. At the same time, the euro area economy has a positive balance of current account. Demand for the euro on the part of foreign investors are likely to help support the single currency, - said Mr. Bloom.
The recession in the euro zone is unlikely
While uncertainty about «Brexit», is likely to slow down business investment in the euro area in the coming years, the economic impact of the referendum results will not be so severe as to plunge the euro zone economy into recession. Of HSBC lowered its growth forecast for 2017 from 1.5% to 1 % after the vote, but kept its forecast for 2016 unchanged. At the same time, they expect that the impact on the UK economy can be much greater.
"Domino effect" has been exaggerated
Euroskeptic parties in all countries of the European Union supported the decision of the UK to leave the EU and called for similar referendums in their countries. This has led to fears that the situation could have a "domino effect", creating a wave of similar referendums on the continent. But Mr. Bloom argues that anti-European parties basically do not have a strong influence on the public and the negative sentiment in the EU are less intense than many believe.
«Brexit» can unite eurozone
UK decision to leave the EU is a stimulus for European officials to make a stay in the unit more competitive and attractive prospect. «Brexit» will be the wake-up call that the officials of all countries must join together and find an acceptable solution.
Do not forget about the Fed
Perhaps the most compelling reason not to bet against the euro is the expectation chtoFederalnaya Reserve will not take any decision before the end of the year. This argument got another boost Wednesday when the minutes of the June meeting of the Federal Reserve suggested that during the next meeting rates are likely to remain at the same level. the Fed will not raise rates this year, HSBC Bank economists say. And they expect only one more rise in 2017. The European Central Bank is expected to continue its current program of easing monetary policy in the future. But without an increase in US interest rates, there is only a small chance to increase the dollar.
Based on materials WELTRADE