Euro Pound Exchange Rate Enjoys Tailwinds amid UK Political Chaos
At the time of writing the EUR/GBP exchange rate is trading at around £0.9876 which is roughly up 0.5% from this morning’s opening rate.
Pound (GBP) Drops as New Conservative Leadership Race Starts
The Pound (GBP) is down against the majority of its peers this morning as the Tories begin their search for a new party leader a mere 45 days after Liz Truss came into office.
This follows a particularly turbulent week for Truss who stepped down yesterday afternoon. At the time of her resignation 15 tory MPs had called for her removal. They were spurred on by Home Secretary Suella Braverman’s shock resignation and the chaotic fracking vote on Wednesday.
In the wake of her announcement, the Pound enjoyed a brief boost. Its gains have been shed today as the start of the leadership race creates fresh uncertainty.
Also dragging on the Pound today is the release of the latest retail figures. The data showed a second consecutive drop in September. Sales fell from -1.7% in August, which were revised figures, to 1.4% last month.
Euro (EUR) Mixed as Ukraine War Continues to Escalate
The Euro (EUR) is up against the Pound but is otherwise trading in a broad range today as headlines concerning Ukraine underpin trade.
Attempts by Russia to weaken Ukraine’s infrastructure continue. Explosions have been reported in Kharkiv and another missile has hit Zaporizhzhia. Russia has also been accused of planning the destruction of a hydroelectric plant in the eastern Kherson region.
Ukraine’s President Volodymyr Zelenskiy said in a statement on Thursday:
‘With this terrorist attack, they can destroy, among other things, even the possibility of supplying water from the Dnipro River to Crimea. In the event of the destruction of the Kakhovka HPP dam, the North Crimean canal will simply disappear.’
However, the Euro is finding some support amid a more sanguine outlook for the Eurozone’s energy supply, following a EU council meeting yesterday. During the session many bloc leaders pledged to enact measures that would relieve the energy crisis within the Eurozone. As such, the Euro’s losses are being partially tempered today.
Euro Pound Forecast: UK Leadership Contest to Sink GBP Further?
Looking ahead, the Euro Pound exchange rate will likely continue to be driven by UK politics.
In lieu of any more UK data today, GBP investors will turn to politics to guide Sterling trade. Volatility could occur during the rest of the day if any of the MPs picked for early backing make a statement.
Turning to the Euro, consumer confidence data is expected this afternoon. The forecast drop from -28.8 to -30 could weaken the single currency further.
In the meantime, EUR will likely be influenced by developments between Russia and Ukraine.
