Pound euro (GBP/EUR) exchange rate steady following UK election
The pound euro (GBP/EUR) exchange rate is rangebound today in the wake of a widely anticipated election victory for the Labour Party.
At the time of writing, GBP/EUR is trading at around €1.1803, having wavered in a narrow range this morning.
Pound (GBP) holds firm as labour wins UK election
The pound (GBP) is holding steady today after the Labour Party won the UK general election by a landslide.
At the time of writing, Labour has won 412 of the 650 parliamentary seats, giving it a significant majority, with three seats yet to be declared. The Conservative Party, which previously ruled with 371 seats, has been reduced to just 120.
The results closely resembled what many polls had predicted in the run-up to the election, and markets had priced in a Labour landslide. Therefore, the results have so far had little impact on GBP.
Laura Foll, a portfolio manager at Janus Henderson Investors, commented:
‘It’s a breath of fresh air to be running equities in a market where the election is seen as a non-event.
‘I’m hoping we’re going back to an era where boring is good and politics treads lighter in people’s lives.’
With the election unfolding without any notable surprises, Sterling is holding steady today.
Euro (EUR) stable despite weaker economic data
Meanwhile, the euro (EUR) is also holding firm today, with the common currency shrugging off some underwhelming economic data.
Earlier this morning, new data showed an unexpected slump of 2.5% in German industrial production in May. This follows a similar shock decline in factory orders published yesterday.
Furthermore, Eurozone retail sales recovered less than expected in May. Sales growth printed at 0.1%, rather than the forecast 0.2%.
Regardless, the euro remains afloat. EUR seems to be enjoying its negative correlation with a weaker US dollar (USD).
Pound euro exchange rate forecast: election results to remain in focus
Looking ahead, we could start to see some movement in the pound as the day unfolds and Labour’s election victory sinks in.
Many business leaders have expressed cautious optimism about the new government, saying that they hope stability and clarity will allow for more investment and an improved economic outlook.
In addition, investment giant Goldman Sachs has raised its 2025 and 2026 UK growth forecasts.
If we see more positive responses from economic analysts and business leaders today, the pound could start to trend higher.
For EUR investors, another election is in focus, as France will hold the second round of its legislative election on Sunday.
The far-right National Rally (RN) party is set to fall short of an absolute majority, which would lead to a hung parliament. If RN beats the odds and takes power, the euro could slump. A hung parliament might initially provide EUR investors with relief, but the single currency could quickly lose its appeal.
Ahead of the vote, EUR may be muted for the remainder of today’s session.