EURGBP Faces a Big Day with Scottish Elections and BoE

EURGBP Faces a Big Day with Scottish Elections and BoE

The EURGBP rate is 0.18% lower in early trading on Thursday as traders prepare for Scottish elections and a Bank of England interest rate announcement. Nicola Sturgeon has warned that “never has so much been at stake” as she makes a final bid to lead the nation towards independence.

The EUR to GBP is trading within the range of April’s yearly low and the March highs at 0.8642.

Bank of England interest rate decision ahead

The Bank of England ware expected to say that the country’s economy is heading for a much stronger recovery than it previously predicted, according to Reuters:

“The BoE forecast in February that the world’s fifth-biggest economy would grow by 5% in 2021, having slumped by 10% in 2020.

That was a bigger hit than in most other European economies after Prime Minister Boris Johnson was slower to impose a coronavirus lockdown and had to keep it in place for longer in an economy heavily reliant on face-to-face consumer services. But many economists say Britain is now set to grow by more than 7% this year, boosted by its fast COVID-19 vaccinations.

There’s a growing sense that the UK is finally on the way out of the pandemic, and with that comes an increased focus on the Bank of England’s future tightening plans,” analysts at ING said in a note to clients. Indeed, we think the Bank may announce some tapering of its quantitative easing programme.”

The interest rate decision will come at midday and lead the way for events north of the border.

Scottish elections could hurt the pound

Nicola Sturgeon has said that “never has so much been at stake” as she makes her last stand to convince Scottish voters that independence is the way forward for the country. The future of the UK is potentially at stake at the ballot box on Thursday, with a late surge in the polls boosting Sturgeon’s hopes of an overall majority in the Scottish parliament. That would see further calls for independence and a stronger showing for Patrick Harvie’s Green party would also increase the voices for a second referendum.

The final polls ahead of the “Super Thursday” votes have suggested that the Scottish National Party could win 68 of the 129 seats at Holyrood. Such a result would be the best tally in ten years when the independence drive first began.

Boris Johnson said the talk of another independence poll was “reckless and irresponsible” at a time when the UK is just recovering from the economic destruction of his lockdowns. But Johnson said, “Let’s wait and see what actually happens. I think that most people in Scotland, most people around the whole of the UK, feel that this is not the time.”

The EURGBP slipped from the 0.8700 level over the last couple of weeks and could move towards the April lows if the pound can find strength.