GBP/EUR Exchange Rate Rangebound as UK Politics in Focus
The Pound to Euro (GBP/EUR) exchange rate is struck in a narrow range this morning as markets brace for Boris Johnson and Jeremy Corbyn’s first TV debate.
At the time of writing the GBP/EUR exchange rate is trading at around €1.1701, virtually unchanged from this morning’s opening rate.
Johnson-Corbyn Clash to Rock the Pound (GBP)?
After getting off to a strong start this week, the Pound (GBP) appears to have entered consolidation mode this morning as markets await fresh impetus.
Sterling surged higher on Monday as the latest polling data showed that the Conservatives had extended their already commanding lead over Labour.
GBP investors generally favour the Conservatives in the upcoming general election on hopes a Tory majority will help to break the Brexit deadlock in Parliament.
Lee Hardman, currency analyst at MUFG, said:
‘[The] market’s just moving to price in a higher likelihood of a majority for the Tories. We’ve had the opinion polls at the weekend generally all showing increasing support for the Tory party, making the market more confident they could win a majority, seen as more favourable in the short term.’
However, a lot could still happen in the four weeks still remaining before the election on 12th December, with this evening’s TV debate between Johnson and Corbyn being a good chance for the Labour leader to win over support.
With Johnson having the most to lose we can expect Corbyn to come out punching this evening, with Labour potentially closing the gap with the Tories if he is able to land a couple of good blows.
YouGov is scheduled to publish its latest poll immediately after the debate, with the Pound potentially coming under pressure if the Conservatives are shown to have lost some ground.
GBP/EUR Exchange Rate Forecast: Gloomy PMIs to Weigh on Both Currencies?
Looking ahead, outside of potential UK political developments, the direction of the Pound to Euro (GBP/EUR) exchange rate this week looks set to be dictated by the latest UK and Eurozone PMI releases.
In the UK the flash PMI releases may exert some pressure on Sterling at the end of the week, as they are forecast to show that growth in the UK’s private sector continued to stagnate this month.
Over the in the Eurozone the PMIs look to be a bit of a mixed bag, with economists expecting it to show the bloc’s manufacturing sector remains in bottom gear, while the service sector slowly recovers after striking an eight-month low in September.
Also influencing EUR exchange rates later in the week will be Christine Lagarde’s first speech as European Central Bank (ECB) President, with investors eager to see how closely she plans to follow in her predecessor’s footsteps on money policy.