Home » Pound buffeted by politics and headlines – but would new PM bring stability to GBP/EUR?

Pound buffeted by politics and headlines – but would new PM bring stability to GBP/EUR?

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The Pound to Euro exchange rate put in a slightly weaker performance today following a mixed performance throughout the week. The pair was trending just below the week’s opening levels at the level of €1.1224 at the time of writing.

Conservative Party Leadership Contest Underway as Progress Seen in Eurozone Budget Plans

Both the Pound and the Euro saw mixed movement throughout the past week, as political and economic uncertainties in both the UK and the Eurozone made investors hesitant to make any major movements on either.

For Pound investors, the main focus has been the UK Conservative Party leadership contest which has so far indicated that Brexiteer Boris Johnson is on track for a resounding victory.

Johnson’s popularity has dispelled some of the uncertainty weakening the Pound, but concerns about his hard stance on Brexit are keeping the British currency muted.

The Euro, on the other hand, spent most of the week with relatively poor support. The European Central Bank (ECB) has avoided taking a dovish stance on the Eurozone economic outlook, but investors remain concerned due to signs of weakness in Eurozone data.

The Euro saw a little stronger support at the end of the week amid reports that progress was being made on ongoing attempts to introduce a Eurozone-wide budget plan.

Eurozone Inflation in Focus for Week Ahead

The Pound to Euro exchange rate has remained weak, but its losses have been limited due to a lack of support for the Euro.

As a result, while Pound movement remains mixed on Brexit and UK political uncertainties, GBP/EUR investors will be focusing on upcoming Eurozone data that could influence European Central Bank (ECB) monetary policy expectations and the Euro’s movement.

Perhaps the biggest focus of the week will be Tuesday’s Eurozone Consumer Price Index (CPI) inflation rate report, which could make investors more convinced of a dovish shift for the ECB if it disappoints. This would make it easier for GBP/EUR to recover and end its downward trend.

Other Eurozone stats due throughout the week may prove influential as well. Eurozone wage data from Q1 will come in on Monday, and Markit’s June Eurozone PMI projections will give investors a better idea of how the bloc’s economy is performing.

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