Sterling seems to have held its strength from yesterday, with the pound to euro exchange rate holding at 1.1684 at the time of writing. This has been in response to favourable opinion polls pointing to a Conservative majority government. Yet, it is imperative to remember that the British public has produced some unexpected results in elections over the past few years. We would only need to see an upset in a small number of constituencies for the Conservative Party to see that majority disappear.
Throughout the week, the pound to euro interbank exchange rate has slowly climbed, eventually reaching its highest in six months on Thursday at 1.17026, despite the publication of weak retail sales statistics. Similarly, the pound to dollar exchange rate has also increased somewhat, reaching a high of 1.2878 today. Sterling appears to be flying high, but there is potential for this to drop come the election next month, and it might even be seen as overpriced.
This high comes after several polls putting the Conservatives ahead of the Labour Party and giving them an overall majority in next month’s election. A poll done within the last 24 hours shows the Boris Johnson’s party currently has a 14 point lead over Jeremy Corbyn’s Labour.
We’ll continue to watch the pound respond to the various election-related announcements over the coming days. Late on Thursday afternoon, the Shadow Chancellor for the Labour Party, John McDonnell, announced that Labour intends to offer free fibre broadband to everyone in the UK, including businesses, by 2030. Full reaction from businesses and the public are yet to be seen, but this would involve partly nationalising BT- something that probably would not sit well with the market.
What’s impacting the GBP/EUR exchange rate from across the channel?
And of course, we can’t forget what’s happening across the Channel, with the EU taking legal action against the UK for Boris Johnson’s refusal to send a UK representative to the European Commission. The Prime Minister claims this is because the UK is in the middle of an election period, resulting in his inability to nominate someone. The EU Commission has said Britain has until 22nd November to send someone. If this were to go ahead, we could possibly see a dip in sterling, as tensions between the UK and EU would deteriorate further ahead of Brexit.
Nevertheless, none of this can be taken as a definite. The finals vote results from the UK electorate have been known to go against the Government polls, so there’s the potential for voting intention to change substantially over the next four weeks. However, the markets do pay close attention to Polls in the lead up to an election so it’s important to be aware of the direction they’re taking.
For more information on Euro exchange rates and for assistance in making transfers, then please contact me, James Lovick, at email@example.com.