The pound surged by more than 2% after the exit polls delivered the news it had been hoping for: that Boris Johnson’s Conservative government was on track to secure a huge parliamentary majority. The pound to euro rate surged over 1.20 – a three-and-a-half-year high – before settling at 1.19 on Friday.
So, what next for the pound in the immediate term? With Brexit not expected to happen for another few weeks, the GBP to EUR rate will have to settle for news around the build-up to the big day – particularly the future trade agreement with the EU – and any upcoming data releases. As it happens, next week is a manic one in the UK’s economic data calendar, with a raft of significant releases and announcements scheduled throughout.
Key Data to Look out for Next Week
It all kicks off with the release of Markit Manufacturing PMI for December on Monday. This is followed by the ILO Unemployment Rate on Tuesday and the Consumer Price Index for November on Wednesday. Monetary policy takes centre stage on Thursday when the Bank of England makes its latest interest rate announcement, with borrowing costs predicted to remain steady. All of which will provide a clear understanding of the current health of the UK economy. Negative data has the potential to check the pound v euro’s stride following its election inspired gains.
The euro meanwhile will be keeping a close eye on Monday’s Markit PMI for December and Labour Cost figures. The single currency must wait until Wednesday for the next release of note, when the Consumer Price Index hits the headlines. New ECB President Christine Lagarde will also deliver a speech early on Wednesday. Investors in the euro will be listening out for any mention of monetary policy. The central bank held interest rates steady during her first meeting in charge and pledged to continue purchases of €20 billion in financial assets per month for “as long as necessary”.
If you would like to learn more about what may affect the GBP/EUR or have an upcoming currency transfer, please contact me, Tom Holian, using the form below.