GBP/EUR Exchange Rate Edges Higher, Moody’s Cite Possible ‘Deterioration in European Banks’
The Pound Euro (GBP/EUR) exchange rate edged higher today, with the pairing currently trading around €1.186 as the single currency struggles after Moody’s Investors Services set out its negative economic growth outlook for the Eurozone.
Moody’s said in its statement:
‘Outlook for Euro-area banks is negative as economic slowdown, continued accommodative monetary policy will erode already weak profitability.
‘If trade tensions escalate, between the US and China or US and EU, there would be a bigger deterioration in European banks.’
The Euro (EUR) failed to gain on the Pound (GBP) due to growing concerns that Germany, the Eurozone’s largest economy, will fail to recover before the end of the year.
With no Eurozone economic data due out today, the Euro has remained effectively rudderless and has remained volatile on growing concerns over global economic and political developments as well as rising uncertainties over the outcome for the UK’s general election tomorrow.
GBP/EUR Exchange Rate Edges Higher Despite Heightened Election Uncertainty
The Pound (GBP) rose against the Euro (EUR) today despite increased uncertainty ahead of tomorrow’s general election.
This follows last night’s release of the updated YouGov MRP poll which suggested that the Conservatives were now set to secure only a small majority of seats ahead of the Labour Party.
Chris Curtis, YouGov’s Political Research Manager, commented:
‘Our latest and final poll shows that a small Conservative majority is likely, with the Tories taking 22 more seats than in 2017 and Labour losing 31.
‘But the margins are extremely tight and small swings in a small number of seats, perhaps from tactical voting and a continuation of Labour’s recent upward trend, means we can’t currently rule out a hung parliament.’
With no UK economic data due out today, Sterling traders have become increasingly jittery ahead of tomorrow’s election, with fears rising over the possibility of a hung parliament tomorrow.
GBP/EUR Outlook: UK General Election in Focus
UK political developments will remain firmly in focus this week, with tomorrow’s general election likely to keep the Pound in a heightened state of volatility until the end of the week.
Any signs of a hung parliament, however, could see the GBP/EUR exchange rate fall on heightened political uncertainty.
Euro (EUR) traders, meanwhile, will be awaiting tomorrow’s release of Germany’s Harmonized Index of Consumer Prices for November, with any signs of improvement buoying confidence in the Eurozone’s largest economy.
Tomorrow will also see the European Central Bank’s (ECB) interest rate decision, which is expected to hold at 0%.
However, any dovish commentary during the ECB’s rate statement would prove EUR-negative.