The Pound to Euro interbank exchange rate was boosted yesterday, breaking over 1.11 and hitting a high of 1.1178 this morning. Yesterday was another eventful day in British politics, with Brexit tensions at boiling point, and the political parties trying to outmanoeuvre each other.
Whilst Prime Minister (PM) Boris Johnson has called for a snap general election, having lost his majority in government, the opposition Labour Party is reluctant to permit one, until a ‘no deal’ Brexit has been taken off the table. This is despite the Labour Party having previously been seeking a general election at the first available opportunity.
On Wednesday, MPs voted successfully to prevent the PM from taking Britain out of the European Union (EU) without a deal. Mr. Johnson has been described as “trapped in office” and will be compelled by law to request a further delay from the EU before the UK’s departure.
Any new developments or last minute changes that could see Mr. Johnson hold a general election earlier are likely to cause volatility for the GBP to EUR pair. Those looking to buy or sell Euros would be wise to plan around these political developments, which are having a sizeable impact on the interbank rates.
Best time to buy Euros this week
In the Eurozone, German factory orders could signal troubles for the engine room of the Eurozone economy and could weigh heavily on the Euro. The slump in July, which saw orders fall by -2.7% from the previous month, highlight a worsening outlook in the sector.
Some of this is down to the US – China trade war, as the global economy slows, and some of it could be attributed to Brexit as well. What is clear is that the global slowdown is having a negative impact on the Eurozone economy. German industry in particular appears to be very susceptible to global changes in trade.
Meanwhile, the European Central Bank is keeping its options open to maintain loose policy. This is although President Mario Draghi, as well as others, have voiced scepticism over any new rounds of quantitative easing. However, it is widely expected that Mr. Draghi, who stands down next month, will introduce additional measures to keep the EU economy afloat, in an attempt to fend off a possible recession.
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