The pound to euro interbank exchange rate stands at 1.1683 today, its highest in around six months, or since May 7th.
By contrast, back on August 10th, sterling was as weak as 1.0646 versus the Eurozone’s common currency, so it’s since strengthened by over 10 cents, or by 9.74%.
Pound to euro rate strengthens as Farage announces Brexit Party will not contest Tory seats
One reason why the sterling vs euro interbank exchange rate has hit this near 28-week high is because Brexit Party leader Nigel Farage has announced that he won’t contest the 317 seats that the Conservatives won at 2017’s election, at this December’s 12th’s ballot.
Mr. Farage says this is to increase the odds of the Tories winning a Parliamentary majority, to pass their form of Brexit.
According to the latest opinion polls, Prime Minister Boris Johnson’s Conservative have a 10-point lead over the Labour Party, at 38% to 28%, reports the BBC.
Traditionally, this would be enough to grant Mr. Johnson’s party a governing majority in the House of Commons. As the opinion polls shift in the next few weeks, this may affect the pound.
BoE holds interest rates steady, two MPC policymakers dissent
Elsewhere, the Bank of England (BoE) held UK interest rates at 0.75% last Thursday, as widely forecast.
That said, two members of the Monetary Policy Committee (MPC), Michael Saunders and Jonathan Haskel, unexpectedly voted to cut UK interest rates. So the BoE could reduce borrowing costs in early 2020, which may influence sterling.
Meanwhile, the central bank also cut its future UK economic growth forecasts by minus 1% to 2022, citing the impact of Brexit.
UK GDP expands less than forecast in Q3, UK trade deficit expands
Britain’s GDP expanded by 0.3% in Q3, between July and September, said the Office for National Statistics (ONS) today. This was below economists’ forecasts for 0.4%, yet above Q2’s contraction of 0.2%.
Meanwhile, the UK’s trade deficit increased in September, to minus £3.36 billion, from August’s minus £1.76 billion.
Looking ahead, the pound to euro interbank exchange rate may be affected by the shifting UK opinion polls, ahead of next month’s election, as well as key economic data.
These include tomorrow’s UK unemployment and wage statistics for September, Wednesday’s UK inflation data for October, and Thursday’s UK October retail sales, and Eurozone GDP statistics for over the Summer.
If you would like to learn more about what may affect sterling rates next week or have an upcoming currency transfer, feel free to contact our currency specialists using the form below.