The pound to Euro exchange rate has been rising on the expectation of a Conservative majority, which is what the opinion polls are currently showing. The pound has been a barometer of sentiments on Brexit, and with the expectation that a Conservative victory helps the Boris Johnson government to get a Brexit deal through parliament, the pound is stronger. The major cause of worry for the pound has been the prospect of a no-deal Brexit, with the evidence from back on August 10th, when GBP/EUR interbank rates, reached their lowest point since 2008. The low seen in August was when the market was most fearful of a no-deal Brexit, the change in sentiment on Brexit is being mirrored by the change on the pound.
Boris Ahead in the Polls
Sterling is by no means out of trouble, with the potential for changes ahead. Whilst Boris leading in the polls, there could yet be surprises ahead, as we have seen with the 2017, 2015 and 2010 elections, plus with the EU Referendum. Interestingly both the Conservatives and Labour are making some increased spending commitments, which would historically have seen sterling lower, by increasing borrowing from the government.
This election has been termed the Brexit election, and it is likely to shape Brexit ahead in that parliament is quite crucial to how Brexit now plays out. A Boris Johnson majority should allow him to get his deal through, a hung parliament or Labour victory could make it less likely. Even then, such outcomes can be argued as mildly sterling positive, in that they don’t lead immediately or at all, to a no-deal Brexit, which is what the market has proved time and time again it is most fearful of.
GBP/EUR interbank rates have nudged 1.17 again this week, presenting some of the best times to buy Euros in 6 months, any clients with any pound to euro currency exchanges may benefit from a chat with our team about what lies ahead, and how to manage any increased or unexpected volatility. You can contact us using the form below.