Sterling vs Euro Exchange Rate at New 31-Month High on Rising Odds of Tory Win

GBP to EUR: UK & EU PMI Manufacturing Data Focus

The pound to euro interbank exchange rate stands at 1.1913 today. This is its highest in over 31 months, or since April 23rd 2017.

The sterling vs euro interbank exchange rate stands at this new 31-month high, because markets are increasingly factoring in the possibility that the Conservatives will win a majority of MPs, at this Thursday 12th December’s UK election.

According to investors, the odds of a Tory victory now stand at 80%, up from 65% this time last week.

The world’s investors feel more confident that Prime Minister (PM) Boris Johnson’s party will win, because according to Survation’s latest survey, the Conservative stand at 45%, next to the opposition Labour Party’s 31%, a 14% lead.

Traditionally, a 10% lead has been enough to grant the winning political party a majority of seats in Parliament, so this survey has lifted the pound.

Markets Want Decisive Election Result, to Bring UK Stability in 2020, May Influence GBP

In general, money managers want a single party to win this week’s UK vote, to bring stability to the UK in 2020.

After all, if there’s a decisive result, Brexit could be resolved faster, the UK could start to negotiate its future trade deal with the EU, and the UK can work on its domestic legislative priorities.

In turn, this could provide greater certainty for the UK’s businesses, who might respond by hiring more staff and investing next year. This then may accelerate the UK’s GDP (Gross Domestic Product) growth in 2020, thereby benefiting sterling.

Pound to Euro May Be Influenced, by Election Uncertainty This Week

However, turning to the four days left until the UK’s election, the sterling vs euro interbank exchange rate could be influenced by the continuing uncertainty.

In particular, markets remain wary of the risk of a ‘hung’ Parliament, in which no single party wins a majority of seats. This could extend the UK’s Brexit uncertainty, running up against the current January 31st deadline.

In addition, the pound could also be impacted this week, by the UK’s economic growth figures for October 2019, released tomorrow at 09.30 GMT, and forecast at 0.1%.

Meanwhile, the European Central Bank makes its latest interest rate decision this Thursday at 12.45 GMT, which is predicted to remain at 0.0%, and might influence the euro.

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.