The GBP/EUR exchange rate briefly touched a new six-month high this week as a crucial poll indicated that the Conservatives were on track to secure a convincing majority in December’s election.
GBP/EUR Soars on Hopes of a Conservative Majority
UK politics have kept GBP investors on their toes again this week, driving some notable movement the Pound.
This included a sharp surge in the mid-week when YouGov’s MRP poll predicted that Boris Johnson would secure a majority of 68 seats in next month’s general election.
However the GBP/EUR exchange rate eased back from its best levels in the latter half of the week as Johnson came under intense criticism over his apparent attempts to dodge media scrutiny.
Meanwhile, the Euro was left on the back foot through much of the week, undermined by a stubbornly strong US Dollar and some underwhelming economic data from Germany.
However the single currency was offered some modest support at the end of the session as the Eurozone’s consumer price index revealed a better-than-expected rebound in inflation in November.
UK Politics to Remain in the Spotlight Next Week
Looking ahead to next week’s session, UK politics will continue to act as the main catalyst of movement in the Pound to Euro (GBP/EUR) exchange rate.
As we enter the final 10 days of election campaigning, GBP investors will be keeping a close eye on opinion polls, potentially infusing even more volatility into Sterling.
On the data front we may see the publication of the UK’s latest PMI figures drag on Sterling sentiment if they confirm growth in the service sector slumped to a 40-month low this month.
Meanwhile, the Eurozone’s own PMI figures may drag on the Euro next week as they are expected to confirm growth in the bloc’s private sector almost stagnated in November.
Also in focus for EUR investors next week will be the publication of Germany’s latest industrial data.
This may weigh on the single currency through the latter half of the session if it shows that the slump in Germany’s manufacturing sector has persisted into the fourth quarter.