The pound to euro interbank exchange rate stands at 1.1683 today. This remains 0.32% below sterling’s recent 29-week high versus the common currency, reached this Monday 25th, of 1.1721.
In part, the GBP stands below this 29-week high versus the EUR, because the latest opinion polls show that the Conservatives’ lead has fallen, ahead of the UK’s general election on December 12th.
This has worried the world’s financial investors that there won’t be a decisive result, such as a ‘hung’ Parliament, in which case the UK’s economic and Brexit limbo may continue.
Looking to the two weeks or so until election day, sterling could continue to be affected by the polls, as well as this Friday 29th’s Eurozone inflation data.
Pound Weakens, as Odds of Tory Majority Fall by 4%, to 66%, Following Latest Polls
In particular, the sterling vs euro interbank exchange rate is below its 29-week high, because the financial markets have cut the odds that the Tories will win a majority of MPs by 4%, down to 66%.
First, this follows a poll by ICM this Monday, which showed that Prime Minister Boris Johnson’s party’s lead has fallen to just 7%. Similarly, a Kantar survey yesterday revealed that the Tories’ advantage has declined by 7% in a week, from 18% to 11%.
Partly, it’s thought that this is because Labour revealed its manifesto last week, including a large increase in public investment and renationalising industries like rail and water, which has increased Labour’s support in the polls.
‘Hung’ Parliament Risk Rises, Which Could Extend UK’s Economic, Brexit Deadlock
Sterling has weakened versus the euro on the interbank market following these polls, because it’s thought that they raise the risk of a ‘hung’ Parliament. This is when no single political party wins enough MPS to form a stable, majority government.
In these circumstances, the House of Commons may remain unable to pass a Brexit deal, while the UK’s domestic agenda, like schools, hospitals and investment, may be neglected. This may weaken the UK’s economic growth in 2020, thereby weighing down the value of the pound.
Looking ahead, the pound to euro interbank exchange rate may continue to be affected by the shifting polls, as well as the Eurozone’s inflation data for November, due this Friday 29th at 10.00 GMT.
For more pound to euro news or if you have a currency requirement you can get in touch on +44(0)1494 360 899 to discuss these factors in more detail or you can contact one of our currency specialists using the form below.