Pound close to 4 months lows vs the euro owing to political landscape

GBP EUR Slumps Despite UK Rates Lift-Off

The pound to euro rate is now trading close to its lowest level in four months.

British politics and the impact on the pound to euro rate

There are a number of reasons for the pound’s recent demise against the euro. The European elections have highlighted a problem with British politics and this has negatively impacted sterling exchange rates. It appears that the voting public are divided on the subject of Brexit and as of yet neither the Tories nor Labour have offered a clear path. According to some bookies there is a 7/2 chance of a second referendum which demonstrates that there is an increasing appetite for this to happen.

It is clear that the current plan is not working so could a second referendum be one of the only options left to break the impasse?

Pound to euro forecast

I would not be surprised to see further losses for GBP/EUR in the near future. The Tories are about to start a leadership campaign. Currently, there are 11 candidates, so the future is still very uncertain. Boris Johnson appears to be the favourite, but nothing is certain in politics at the moment, this is why I think we’ll continue to see the pound struggle against the euro.

Economic data to influence pound to euro exchange rates

We could see a busy end to the week with the pound to euro exchange rates owing to economic data due out tomorrow. We begin with UK housing data in the UK with mortgage approvals for April. The housing market has been impacted by the uncertainty of Brexit so I think we could see the data show a fall. If this happens I would expect to see the pound drop against the euro.

This Friday will see the release of German inflation data. As Germany is the largest economy in the Eurozone, it is often used as a barometer of the Eurozone’s economy. If we see a drop this could negatively impact the Euro against the Pound. Therefore, expect to see some movement both ways during tomorrow’s trading session

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