The GBP/EUR exchange rate was catapulted to a three-year high this week as the Conservative’s huge election win elicited cheers from markets.
GBP/EUR Skyrockets as Tories Win Big
Unsurprisingly UK politics continued to dominate movement in the Pound this week as UK voters went to the polls in what was billed as the most important general election of a generation.
A stunning victory for the Tories sent Sterling skyward in the latter half of the week, on hopes a solid majority will remove the risk of a no-deal Brexit next month by expediting the passing of Boris Johnson’s EU withdrawal deal.
However it wasn’t all plain sailing for the Pound this week, with GBP exchange rates taking a tumble in the first half of the session as YouGov’s final MRP poll predicted a reduced majority for the Tories.
Meanwhile, the Euro got off to a strong start last week, rising on the back of a surprise jump in Eurozone economic sentiment in December.
The latter half of the week saw these gains begin to fade however, as the European Central Bank (ECB) concluded its last policy meeting of the year, signalling rates were likely to remain at record lows throughout 2020.
Will Johnson be Able to Push through His Brexit Deal Next Week?
Looking ahead to next week’s session, there will be plenty to keep both GBP and EUR investors on their toes.
In the UK the focus will be on Boris Johnson amidst expectations he will try and push his Brexit deal through parliament before Christmas, potentially propelling the Pound even higher as it eases market uncertainty.
GBP investors will also be keeping a close eye on the Bank of England (BoE) as its final policy meeting of the year may provide more insight into an expected rate cut in 2020.
There will also be a final blast of UK economic releases, with PMI, inflation and employment figures all scheduled for release throughout the week.
Meanwhile, the main catalyst of movement for the Euro will be the publication of the Eurozone’s own PMI figures. Expect to see the single currency weaken if they continue to paint a gloomy picture of the bloc.
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