GBP/EUR exchange rate soars as SNP fails to secure majority

The Pound Euro (GBP/EUR) exchange rate struck a new one-month high this week, mostly as a result of easing fears of another Scottish independence referendum. 

Pound surges as political uncertainty eases 

The Pound got off to a roaring start this week, surging over 1% against the Euro on Monday as GBP investors expressed their relief that the Scottish National Party (SNP) failed to secure an outright majority in last week’s elections, as it eased immediate fears of an independence referendum. 

These gains were further bolstered by Boris Johnson’s confirmation that more of the UK economy would be allowed to reopen from 17 May. 

At the same time, the Euro was able to temper its losses against the Pound through the first half of the session after Germany economic sentiment printed at a 21-year high this month. 

Sterling then extended its gains in the middle of the week following the release of the UK’s latest GDP figures, after the UK economy contracted less than expected in the first quarter of 2021. 

However, the Pound then gave some ground against a stronger Euro, after Boris Johnson voiced his concerns about the spread of the Indian variant of coronavirus in the UK. 

This uptick in the Euro came in response to a weakening of the US Dollar as well as improving economic optimism within the Eurozone, as a result of the EU’s accelerated vaccine rollout. 

Sharp rise in UK inflation to boost Sterling? 

Looking ahead, its set to be a busy session for GBP investors next week, with a slew of high-impact UK data releases. 

Perhaps the most notable release will be the UK’s consumer price index, which could see the Pound strengthen on Wednesday as economists forecast domestic inflation accelerated sharply in April. 

Also influencing GBP exchange rates will be the publication of the UK’s latest jobs report, in which another solid rise in wage growth may bolster Sterling sentiment. 

In addition, the reopening of more of the UK economy on Monday could also prove supportive of the Pound. 

Meanwhile, the primary focus for EUR investors next week will be the publication of the Eurozone’s latest PMI releases. 

May’s preliminary figures are expected to reveal that economic activity in the bloc continued to improve, with the easing of coronavirus restrictions and the EU’s accelerated vaccine rollout helping boost the Eurozone’s growth prospects in the second quarter. 

If you’ve got a GBP/EUR currency transfer to arrange, the team at TorFX are on hand to help. Get started now to access bank-beating exchange rates and fast, free transfers.  

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