Pound euro (GBP/EUR) exchange rate wavers as markets digest election outcomes
The pound euro (GBP/EUR) exchange rate is largely subdued this morning as investor response to both the UK and French elections limits any notable movement within the currency pairing.
At the time of writing the GBP/EUR exchange rate is trading at around €1.1836, virtually unchanged from this morning’s opening rate.
Euro (EUR) flat amid political uncertainty
The euro (EUR) is struggling to attract investor support this morning amid a lack of fresh economic data.
With macroeconomic releases in short supply, concerns stemming from France’s recent election may serve to keep the common currency on the backfoot, as fears of French political instability sour EUR sentiment.
While Marine Le Pen’s far-right National Rally (RN) finished in third place, behind the French centrist coalition and an alliance of left-wing parties, investors were seemingly relieved that the nationalist and ‘unsustainable’ fiscal policies had not taken precedent amongst French voters.
However, concerns of a hung parliament may continue to deter investor interest in the common currency as a sense of political instability lingers across the pond.
Pound (GBP) buoyed despite data lull
The pound (GBP) is trending higher against its EUR counterpart this morning, as retiring Bank of England (BoE) policymaker Jonathan Haskel’s apprehensions surrounding August interest rate cuts continue to buoy Sterling.
Haskel commented:
‘The labour market continues to be tight, and I worry it is still impaired.
I would rather hold rates until there is more certainty that underlying inflationary pressures have subsided sustainably.’
Elsewhere, investors may remain focussed on the newly elected Labour party’s outlook towards domestic growth.
Stepping into her role as UK Chancellor, Rachel Reeves has affirmed the party’s pledge to fix the fundamental foundations of the UK economy, drawing investor focus towards Labour’s fiscal and economic plans moving forwards. Should market response remain optimistic, GBP sentiment may remain positive as the session progresses.
Pound euro exchange rate forecast: central bank speeches in focus
Looking ahead, a series of speeches from both the European Central Bank (ECB) and the BoE may drive movement within the pound euro exchange rate amid a lack of wider releases.
Later today, BoE Gareth Truran is due to speak. Should Truran echo Haskel’s hawkish rhetoric, advocating that the central bank should withhold monetary loosening throughout the third quarter, GBP may garner some investor interest.
However, in alignment with the recently elected Labour party’s initiatives to ease the UK’s ongoing cost-of-living crisis, any dovish surprises may see the pound soften against some of its major rivals.
Additionally, a speech from BoE Chief Economist Huw Pill is due to occur tomorrow morning. Huw will likely assess the UK’s inflation outlook, as the vital consumer price index (CPI) edges closer to the BoE’s 2% target rate. Reflecting on recent economic data, Pill may offer his reflections on the potential direction of UK monetary policy, with any talks of restrictive movement likely to underpin GBP.