The Pound Euro (GBP/EUR) exchange rate skyrocketed last week, amid relief that the Scottish national Party (SNP) was unable to secure an outright majority in the previous week’s elections.
What’s Been Happening: Pound Surges after SNP Fails to Secure Majority
The Pound surged out of the gates last week, as GBP investors cheered the news that the SNP had failed to secure a majority in the Scottish parliamentary election, easing immediate fears of an independence referendum.
Aiding the upside in Sterling in the first half of the week was the confirmation that more of the UK economy would be allowed to reopen from 17 May, as well as the UK’s latest GDP figures, which reported a smaller-than-expected contraction of growth in the first quarter.
however, the second half of the week saw the Pound ease off its best levels, in response to fears over the spread of the Indian variant of coronavirus in the UK.
The Euro, meanwhile, was able to temper its losses against the Pound at the start of last week, as German economic sentiment printed at a 21-year high this month.
The single currency then clawed back some of its losses in the latter half of the session, in response to a pullback in the US Dollar (USD).
Three Things to Watch Out for This Week
- UK Data
A slew of high-impact UK data will be the primary focus for GBP investors this week, with employment, inflation, and PMI releases potentially sending the Pound higher if they point to a continued improvement in UK economic activity.
- UK Coronavirus Headlines
Also influencing Sterling sentiment this week, will be any headlines pertaining to the spread of the Indian variant of the coronavirus in the UK, amidst concerns the new strain could derail the government’s roadmap for reopening.
- Eurozone PMI
In the spotlight for EUR investors this week will be the Eurozone’s latest PMI figures. Will a strong expansion of the bloc’s private sector help to bolster the Euro at the end of the week?
Pound Euro Forecast
Looking ahead, the Pound Euro exchange rate could be infused with volatility this week, amidst a mix of coronavirus concerns and a slew of high-impact data releases.