The GBP EUR exchange rate will start the week with German inflation figures which could be a price driver if the number deviates from the rise to 7.6% expected by analysts. UK Prime Minister Boris Johnson will likely face further criticism as more MPs and senior Tory figures round on his leadership.
The GBP to EUR starts the week trading at the 1.1761 level and is trying to hold support at 1.1700 again.
Pressure could build on Boris Johnson to depart
Senior Tory MPs were rounding on Boris Johnson for running the party’s reputation, with latest polls showing that a majority of Britons want him to resign. Another poll showed that Boris would lose his seat if he faced an election at this moment.
Former leader Iain Duncan-Smith also told the Observer that the party had been left with an “enormous identity problem” because of Johnson and Sunak’s tax increases.
The Prime Minister is at risk of a no confidence vote with two more MPs – Steve Brine and Anne Marie Morris – saying they had lost confidence in Johnson. That takes the total of MPs who have gone public to 24.
Others may have submitted letters in secret and Sir Graham Brady could trigger a vote if he receives 54 letters.
“I reckon we are in the 40s,” said one rebel MP. Another said: “We are just a few off.”
Duncan Smith also said that the government should have avoided a tax rise on business, and Sunak should have cut taxes for middle and lower earners.
“He had the headroom not to do a windfall tax. Getting growth going is the priority. We have to avoid recession and to do that we have to lower taxes and get people spending.”
German inflation and Ukraine could swing rates on Monday
Traders will await the release of the latest German inflation figures on Monday with a rise to 7.6% expected. That could drive the GBP v EUR if the price pressures are seen to be higher in Germany.
Attention will turn to Ukraine where there are rumblings that Ukraine is losing its foothold despite weeks of flattering news reports. Ukraine’s President described conditions in the East as “indescribably difficult” in a pessimistic shift, which could suggest the fall of Donbas could be imminent. He noted intense ongoing battles against Russian forces, saying:
“…our defense holds on. It’s indescribably difficult there. And I am grateful to all those who withstand this onslaught of the occupiers.”
The Washington Post also took a more pessimistic tone on Ukraine with reports of Russian troops making steady gains in the East, seizing a strategic railway hub and advancing on other cities at the centre of the Donbas region.
The US is preparing to send long range missiles, but some see it as being too late to turn the tide for Ukraine and in the weeks ahead we will see what a Russian advancement will mean for peace talks, or an escalation from the US and its allies.
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