EUR/GBP Exchange Rate Rangebound as Major UK Parties Challenged by Brexit Party
The Euro Pound (EUR/GBP) exchange rate steadied today and is currently trading around £0.883 on the interbank market.
The Pound (GBP) stabilised against the Euro (EUR) following a busy weekend in which the European Elections showed that the newly-formed Brexit Party, headed by the hard-Brexiter Nigel Farage, had outperformed both of the major parties, the Labour Party and the Tories.
Jeremy Hunt, the Secretary for Foreign Affairs, gloomily commented:
‘The biggest risk to Brexit now is not an issue of getting a majority, challenging as that is; the biggest risk is a general election, because the Labour party is now changing its position to a second-referendum party.’
Sterling is also coming from particular pressure from the uncertainty surrounding Theresa May’s resignation on 7 June, which will leave the Conservative Party without a leader – and fears are mounting that a pro-Brexiter could take her place, more likely leading the UK into a no-deal with the EU.
EUR/GBP Exchange Rate Steadies as Eurozone Business Climate Figures Sink
The Euro, meanwhile, weakened following the worse-than-expected Eurozone business climate figures for May, which eased to 0.30 against April’s 0.42.
The Eurozone’s economic sentiment for May, however, rose above the forecast at 105.1, improving on the previous month’s 103.9.
However, the European Elections have cast a shadow over confidence in the single currency, with Italy’s Deputy Prime Minister and Eurosceptic Matteo Salvini’s party, the League Party, achieved a top position in Italy’s elections.
Salvini commented that ‘Europe is changing’, with Marine Le Pen in France, and Nigel Farage leading the Brexit Party’s victory in the UK.
One Eurozone official commented:
‘[The] Eurozone[‘s] integration was not mentioned during the election campaign. It was not an issue, while climate change, migration and social issues were – and this is what is on politician’s mind’s.’
EUR/GBP Outlook: UK Leadership and Brexit Concerns to Remain in Spotlight
Euro traders will be looking ahead to tomorrow’s German unemployment figures, and with any signs of improvement this could bolster the EUR/GBP exchange rate.
Tomorrow will also see the French preliminary CPI figures for May, which are expected to rise on the month, while annually they are forecast to ease.
The Pound Euro (GBP/EUR) exchange rate will be driven by political developments, with the Conservative’s leadership remaining in the spotlight, and as Brexit no-deal fears rise as the two major parties suffer a set-back following the European elections, we could see Sterling fall further.