Pound to Euro Exchange Rate Tumbles on UK Election Jitters and German Data
Yesterday saw the Pound Sterling to Euro (GBP/EUR) exchange rate jump on UK election hopes, but the pair’s gains were limited and fresh polls have played a part in knocking the Pound (GBP) from its highs. The Euro (EUR) is also a little stronger today.
UK election uncertainty is keeping GBP/EUR movement mixed, as the pair slipped from 1.1672 to 1.1644 last week but has already recovered so far this week.
Overnight, GBP/EUR touched on a high of 1.1721 – which was the best level for the pair in half a year, since May.
This morning though, fresh election uncertainty, as well as some decent Eurozone ecostats, pushed GBP/EUR lower and the pair trends near the level of 1.1683 at the time of writing.
Pound (GBP) Exchange Rates Under Pressure amid Fresh UK Polling Uncertainty
At the beginning of the week, investors piled into the Pound amid the latest hopes that a relatively soft Brexit could be underway as soon as next month.
Weekend UK election polls boosted hopes for a Conservative majority, and comments from Prime Minister Boris Johnson indicated that the Brexit deal could be put to Parliament before Christmas.
However, yesterday’s Pound gains were limited as a Conservative win has already been largely priced into the Pound.
What’s more, the British currency fell today amid reports that some fresh polls showed that opposition party Labour was closing the gap.
This has led to fresh political uncertainty with just over a fortnight until the General Election in December, though bets of a Conservative win remain high for now.
Euro (EUR) Exchange Rates Benefit as German Consumer Confidence Shows Signs of Life
While yesterday’s German business confidence report showed that current conditions were a little weaker than expected, there are still signs of optimism in the outlook.
Following last week’s limited signs of recovery in Germany’s key factory sector and a lack of fresh concerns about how Germany is being impacted by trade, today’s German consumer confidence results were also a little stronger than expected.
GfK’s German consumer confidence survey for December indicated that consumer confidence will unexpectedly improve, from 9.6 to 9.7.
According to Rolf Buerkl, GfK Consumer Expert:
‘The exceptionally high levels of consumer confidence among German consumers have significantly contributed to preventing a recession in Germany in the third quarter.’
Hopes that the German and Eurozone outlooks will continue to recover are helping the Euro to push GBP/EUR lower today.
Pound to Euro (GBP/EUR) Exchange Rate Could See Further Shifts on Next UK Polls
With some of this week’s most recent UK election polls showing a narrowing race, markets are likely to keep a close eye on upcoming polls to see if this shift persists.
If upcoming election polls continue to show that the opposition Labour Party is gaining ground and narrowing the gap, political uncertainty will worsen and the Pound to Euro (GBP/EUR) exchange rate is more likely to weaken.
On the other hand though, if polls show the ruling Conservatives extending a lead again, GBP/EUR will do a better job of holding nearer its best levels.
While Sterling movement focuses on UK politics, Euro movement is likely to be influenced by major upcoming Eurozone ecostats.
French consumer confidence tomorrow will be followed by Eurozone confidence results on Thursday. German inflation rate stats will also be published on Thursday.
Friday’s session could be one of the most influential for this week’s Pound to Euro (GBP/EUR) exchange rate movement though, as German retail, French growth and Eurozone inflation stats will all be published.