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Euro makes Minor Gains against the Pound after New BoE Member is Announced

The Euro has made a small advance against the Pound on Monday’s afternoon session, rising to an exchange rate of 0.8763.

This rise follows concerning news from the UK, specifically focusing on future interest rates. Last week saw the Pound briefly rally when three policymakers voted for an interest rate hike. Today, however, the replacement of one of those hikers, Kristin Forbes, has been announced.

Her replacement, due in early July, will be Silvana Tenreyro. Tenreyro has previously been dovish on monetary policy, with data from 2015 showing her apparent support for negative UK interest rates.

This has put a dent in any residual optimism about a near-term UK interest rate hike, dragging the Pound down against the Euro.

(First published 09:38, June 19th, 2017)

The Euro has fallen slightly against the Pound today, in the wake of a mixed result from the French parliamentary elections.

  • EUR GBP rate dips to 0.8745 – GBP EUR trades up at 1.1436
  • Euro slips despite strong mandate for Macron government – Low voter turnout dampens celebrations
  • Pound rises as Brexit talks begin – Brexit Secretary aims for “special partnership”
  • Eurozone construction stats imminent – Government borrowing stats could boost Sterling

Despite winning a majority of seats in the French Parliament, President Emmanuel Macron still faces clear objections among the voting population.

Euro Unsettled by Low Turnout for Second Round of French Voting

The Euro to Pound exchange rate has dipped slightly today, owing to an unsettling outcome to the French parliamentary elections.

After the second round of voting, President Emmanuel Macron’s supporting parties (En Marche and MoDem) have claimed a majority of the French Parliament’s seats.

Taking 350 seats, this gives President Macron a large majority with which to enact his planned policy changes.

On the other side of the equation, however, voter turnout was extremely low, coming in around the 43% mark. This was seen by some as a defiant action among voters, who did not wish to enable absolute dominance for Macron.

Acknowledging the low voter turnout, Government Spokesman Christophe Castaner said;

‘The French people have given us a clear majority, but they didn’t want to give us a blank cheque. It’s a responsibility. The real victory will be in five years’ time when things will have really changed. There is a strong majority, there’s a will for things to change’.

Macron’s former opponents in the Presidential election took aim at En Marche for the low turnout, with Front National leader Marine Le Pen declaring that;

‘The abstention rate considerably weakens the legitimacy of the new parliament’.

Additionally, left-wing figurehead Jean-Luc Melenchon declared that Macron could not change France’s labour laws due to such poor turnout figures.

GBP EUR Rate Rises as Brexit Talks get Underway

The Pound has made marginal gains against the Euro today, rising to 1.1436 in the pairing exchange rate. This advance has been caused by Brexit talks beginning on time, despite a proper government not yet being formed.

David Davis, the UK’s Brexit Secretary, is heading negotiations. According to released text, Davis is expected to declare that;

‘Today marks the start of negotiations that will shape the future of the European Union and the United Kingdom. We want both sides to emerge strong and prosperous, capable of projecting our shared European values, leading in the world, and demonstrating our resolve to protect the security of our citizens.

I want to reiterate that the UK will remain a committed partner and ally of our friends across the continent. And while there is a long road ahead, our destination is clear – a deep and special partnership between the UK and the EU. A deal like no other in history’.

In these earliest of days, such an optimistic outlook bodes well for talks, but a lot could still change in the predicted two years of Brexit talks.

Eurozone Construction Stats could Restore Euro Demand

The next Eurozone data to watch out for will be upcoming construction figures for April. If annual output rises, then the Euro could advance against the Pound.

The first major UK news of the week will be Wednesday’s government borrowing figures for May. The current deficit is expected to reduce from -9.65bn to -6.5bn, an outcome that could boost the Pound.

Current Interbank EUR GBP Exchange Rates

At the time of writing, the Euro to Pound (EUR GBP) exchange rate was trading at 0.8745 and the Pound to Euro (GBP EUR) exchange rate was trading at 1.1436.