The sterling vs euro interbank exchange rate stands at 1.1858 today. This is 0.46%, or over 0.5 cents, below the pound’s recent 31-month high against the Eurozone’s common currency, its strongest since April 23rd 2017, reached this Monday 9th, at 1.1913.
The GBP to EUR interbank exchange rate has fallen today, because YouGov’s latest MRP (Multi-level Regression and Post-stratification) poll predicts that the Conservative Party will win a smaller majority of MPs at tomorrow’s UK general election, than the last MRP on November 27th.
The new MRP forecasts that the Tories may win a majority of 28 seats, from 68 seats a fortnight ago. Prime Minister Boris Johnson’s party is pencilled in to win 339 MPs, 20 fewer than two weeks ago, while Jeremy Corbyn’s opposition Labour Party is forecast to gain 231 seats, 20 more than on November 27th.
This raises the probability that tomorrow’s UK election might not deliver a clear, decisive result, like the financial markets are looking for, thereby weakening sterling.
Sterling May Be Affected, as Tory Majority Within MRP’s “Margin of Error”
In particular, sterling has lost out today, because according to YouGov’s new MRP, PM Johnson’s projected majority is within “the margin of error”. This is to say that, come Friday morning, a single political party might not have won a majority of MPs, and instead there might be a ‘hung’ Parliament.
In this case, although a UK government might be formed, it wouldn’t have a majority of MPs in Parliament. The UK has experienced this situation for several months under the incumbent PM Johnson, and it’s led to domestic legislative and Brexit deadlock.
Britons Go the Polls Tomorrow, Results Due Early Friday Morning, Might Influence Pound
For example, Anthony Wells, Director of Political and Social Research at YouGov, says that “Over the last fortnight we’ve seen the Conservative lead and the number of seats they are projected to win gradually fall. There are two days until polls close and time for voters to change their minds.”
The British voting public goes to the ballot boxes tomorrow, and it’s thought that we’ll know the result of the election on Friday morning. This could be worth watching for, to see if delivers a clear result or a ‘hung’ Parliament, and its effect on sterling.
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.