Pound to Euro Exchange Rate near 31-Month High, as Odds of Tory Majority Rise

Pound to Euro Falls Below 1.10 Amid Brexit Uncertainty

The pound to euro interbank exchange rate stands at 1.1855 today. This is just 0.04% below sterling’s recent 31-month high versus the common currency, its strongest since May 11th 2017, reached yesterday, at 1.1860.

GBP to EUR near 31-Month High, as Odds of Conservative Majority Rise to 72%

Sterling stands near this 31-month high against the euro, because markets are increasingly confident that the Conservatives will win a majority of MPs at the UK’s general election, next Thursday 12th December.

According to global investors’ latest figures, the odds of the Tories winning a majority of seats have risen by 2%, to 72%, the highest since the campaign began.

In general, money managers want a single party to win next week’s UK election, to provide political and economic stability to the UK in 2020/1.

After all, if a single party wins the vote, Brexit might be resolved faster, and the UK can get on with negotiating its future trade deal with the EU.

UK Economy May Accelerate in 2020/1 If Election Result Clear, Supporting Sterling

In particular, it’s thought that, if the UK’s election delivers a decisive result, then Britain’s economic growth could increase in 2020/1.

Holger Schmieding, Chief Economist at Berenberg Bank, says that “Unlike in 2017, which ended in a hung parliament, Labour does not seem likely to close the gap with the Conservatives. If Johnson wins, expect medium-term UK economic growth to far exceed the European average for around 18 months.”

Mr. Schmieding forecasts that, if there’s a clear result next Thursday, UK GDP (Gross Domestic Product) growth may increase from 1.3% in 2019, up to 1.8% in 2020, then 2.1% in 2021. This possibility has supported sterling too.

Risk of ‘Hung’ Parliament Could Influence Sterling Ahead of Next Thursday’s Vote

However, turning to the six days remaining until the vote, the sterling vs euro interbank exchange rate could be affected, if the opinion polls show that the race is tightening.

After all, although the Tories’ lead stands at 10% according to the latest polls, it only has to drop 3% to 7%, to what’s known as ‘hung’ Parliament territory.

This is when no party wins a majority of MPs, which could extend the UK’s Brexit uncertainty and slow the economy next year. This possibility may affect the value of the pound.

To learn more about factors influencing GBP/EUR exchange rates for an upcoming currency transfer, please contact myself, James Lovick using the form below.