GBP to EUR Rate near 31-Month High, Ahead of YouGov’s Updated MRP Poll

What Facilitated the Euro’s Drop This Week

The pound to euro interbank exchange rate stands at 1.1890 today. This is just 0.19% below sterling’s recent 31-month high against the Eurozone’s common currency, its strongest since April 23rd 2017, reached yesterday, at 1.1913.

The sterling vs euro interbank exchange rate remains near this 31-month high, because the latest opinion polls continue to suggest that the Conservative Party will win a majority of MPs, at the UK’s general election this Thursday 12th December.

For example, according to Politico’s “poll of polls” yesterday, the Tories stand at 43%, 10% ahead of Labour’s 33%. By comparison, back in 2017, Prime Minister (PM) Boris Johnson’s party was at 42.3% at this point in the campaign, next to Labour’s 40%.

So this tells us that the Tories’ lead is 7% higher, compared to this time two years ago. This has assured the markets that this Thursday’s result will be decisive, thereby benefiting the pound.

YouGov to Release Updated MRP at 22.00 Tonight, May Affect Pound

However, looking to tonight, polling company YouGov release its updated MRP (Multi-level Regression and Post-stratification) survey at 22.00 GMT.

The MRP was the only poll to predict that, in 2017, former PM Theresa May would lose her majority of MPs, so it’s closely watched. YouGov’s preliminary MRP for this election, released last November 28th, showed that the Conservatives might win a majority of 68 MPs.

So if tonight’s updated MRP shows that PM Johnson’s party could win a larger or smaller Parliamentary majority than the 68 seats previously projected, this could affect the sterling vs euro interbank exchange rate.

UK’s Tight Trade Talks Timetable Could Influence Sterling, Looking to 2020

Moreover, looking beyond this Thursday’s UK general election, the pound’s value against the euro might be affected, because according to the current timetable, the UK has only until the end of 2020 to negotiate its future trade deal with the EU.

Historically, it’s thought that trade deals take several years to negotiate, in which case the UK might have to ask for more time beyond December 31st 2020, or once more risk a “No Deal” Brexit, in which Britain reverts to trading with Europe on reportedly less-favourable World Trade Organisation (WTO) terms.

So after the UK’s vote this week, the Brexit trade talks could be worth watching for, for their effect on sterling.

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