The euro to pound interbank exchange rate stands at 0.8642 today, just -0.17% below its recent one-week high, its strongest since October 25th, reached yesterday, at 0.8657.
In part, this is because, although the Conservative Party’s lead in the opinion polls has risen, ahead of the UK’s election on December 12th, the election still contributes to the UK’s political uncertainty.
In addition, it’s a packed week for UK and EU economic data, including the UK’s important services sector PMI (Purchasing Managers Index) tomorrow, the Bank of England’s latest interest rate decision on Thursday, and the European Commission’s updated economic growth estimates on Thursday too.
Tories expand lead in polls but election uncertainty still weighs
One factor why the EUR/GBP interbank exchange rate has neared this one-week high is because, although the Conservatives have increased their opinion poll lead, there’s still no telling who’ll form the next UK government.
In particular, according to yesterday’s Opinium poll, the Conservatives now stand at 42%, 16% ahead of Labour. Traditionally, a 10% lead is enough to win the election, so these results could be enough to give UK Prime Minister Boris Johnson a majority in Parliament.
However, although the Tories are leading in the polls, which would contribute to the UK’s political continuity, Mr. Johnson’s victory is by no means guaranteed. In particular, it’s thought that British voters are more likely to switch parties now than at any time in recent history.
As a result, this ongoing uncertainty, until we learn the election result on December 13th, has weakened sterling.
UK services data, BoE, Eurozone economic forecasts may affect EUR/GBP
In addition, the euro to pound interbank exchange rate could be affected this week, by key economic UK and EU data. This Tuesday, we’ll learn the UK services PMI result for October, which it’s forecast will remain in contraction. If so, this could slow the UK economy over the Winter.
Meanwhile, this Thursday the Bank of England looks set to hold UK interest rates at 0.75%, but may cut its GDP growth forecasts for 2019/20. This may affect sterling.
Also, the European Commission releases its updated economic growth forecasts this Thursday too. So we’ll see if the USA’s recent trade tariffs on the EU further slows down the Eurozone, which may affect the euro.
For more information on what could impact your EUR/GBP transfer in the coming weeks, get in touch with me directly, Daniel Johnson at [email protected], or speak with a member of our team on +44 (0)1494 292 675.