GBP EUR Rallies as Heatwave adds Pressure to EU Gas Crisis

GBP EUR Rallies as Heatwave adds Pressure to EU Gas Crisis

The GBP EUR exchange rate was 0.52% higher on Monday as the pair got off to a positive start. The heatwave in Europe adds extra pressure to the looming gas crisis. Another candidate will be eliminated from the Tory election race today. 

The GBP to EUR opens the week trading above the 1.1800 level again. It will have a headwind at 1.1900 again. 

Gas crisis looms with historic heatwave in Europe

Europe faces a potential gas crisis this winter with mounting pressure from the heatwave. 

Energy demand surges as homeowners and businesses make efforts to cool their buildings.  

Russia’s Nord Stream 1 pipeline reopens on Thursday. However, there are fears that the country will extend the annual maintenance period to put the squeeze on Europe’s economy and politicians. 

Germany’s economy minister, Robert Habeck said that the country must plan for the worst. There are fears of a broader economic crisis as the year progresses. He observed that “anything can happen”; the gas could flow again or nothing will come at all.  

The Nord Stream pipeline supplies around 40% of Europe’s gas, becoming a significant threat to the Eurozone economy. 

Spain’s Enagas said last week that demand for natural gas reached a new record as air conditioning units battle hot temperatures. The situation is temporary, with the heatwave predicted to end by mid-week. 

Sunak and Truss cancel tv debate after recent arguments

Sky News cancelled a Tory leadership debate after Rishi Sunak and Liz Truss declined to take part after debates ended in bitterness.  The broadcaster said the two candidates confirmed they did want to take part over concerns about the damaging effect of the debates on the party’s image, exposing disagreements and rifts within it. 

The Tory party clashed over the economy with Rishi Sunak defending tax hikes and fiscal austerity against all other candidates. The former chancellor said Ms Truss promised “something-for-nothing” economics after she criticised his recent tax hikes. Sunak also said that Penny Mordaunt’s “loose” fiscal plans were worse than anything Jeremy Corbyn promised. 

As the week began, Sunak and Mordaunt were in the lead, with Liz Truss in third. The market will follow the race carefully due to the different fiscal plans of the candidates.  

Many Tories want to see corporation taxes slashed to fuel the economy, but there are also fears that reversing the tax hikes will worsen the country’s finances.  

Tomorrow brings critical economic data with the latest UK employment numbers. 

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