Pound Euro Exchange Rate Muted as Boris Johnson’s Faces Difficult Day
The Pound Euro (GBP/EUR) exchange rate is rangebound so far this morning as UK political jitters grow ahead of the publication of the Sue Gray report.
At the time of writing the GBP/EUR exchange rate is trading at around €1.1961, virtually unchanged from this morning’s opening rate.
Pound (GBP) Flat as Investors Brace for Publication of Gray Inquiry
The Pound (GBP) is trading without any strong directional bias this morning, with GBP investors on edge ahead of the publication of the Sue Gray inquiry into alleged lockdown breaches at Downing Street.
Boris Johnson’s premiership has been rocked in recent weeks by the ‘partygate’ scandal, with stories emerging of multiple gatherings at Number 10 which may have breached Covid restrictions in place at the time.
The stories have seen the Prime Minister drawn significant criticism from within his own party, but he has so far managed to stave off a vote of no confidence as Conservative MPs await the publication of an internal investigation into the breaches, lead by senior civil servant Sue Gray.
But with reports suggesting Gray’s inquiry could be published as early as today, Johnson could be facing a tumultuous few days.
Should Gray’s report be as damaging to the PM as some sources have suggested, the Pound Euro exchange rate could also be in turbulent couple of days, with Sterling likely to tumble if Tory MPs trigger a leadership challenge.
Euro (EUR) Stumbles as Italian Politics in the Spotlight
At the same time, the Euro (EUR) is also trading in a narrow range so far today, with EUR sentiment being suppressed by political uncertainty in Italy.
Since February 2021 Mario Draghi has lead a unity government in Rome which has helped bring much needed political stability to the Eurozone’s third largest economy, as well as paving the way for reforms to Italy’s tax and justice system and public administration, which will are need to unlock billions of Euros from the EU’s recovery fund.
However, Draghi’s future as Prime Minister is now in doubt as he is widely seen as the most qualified candidate for President, the voting for which is taking place this week.
EUR investors fear his government could swiftly collapse and Italy face snap election if he is election President.
Pound Euro Exchange Rate Forecast: Slump in German GDP to Drag on the Euro?
Looking ahead to the second half of the week, the Pound Euro (GBP/EUR) exchange rate could trend higher towards the end of the session, following the publication of Germany’s latest GDP figures.
Economists forecast Friday’s figures will report growth in the Eurozone’s largest economy will have contracted in the latest quarter of 2021 as the country wrestled with a massive outbreak of Covid cases.
Applying additional pressure to the Euro may be the publication of the Eurozone’s economic sentiment index, which is predicted to have fallen this month.
In the meantime, the publication of the Confederation of British Industry’s (CBI) distributive trends index could offer some support to the Pound if it reports retail sales volumes increased this month.