The pound soared to €1.1734, a fresh 6 month high versus the euro on Monday on election speculation. The pair eased off into the close, ending the session just 0.05% higher and below €1.17.
The pound soared in the previous session as the Tories threw themselves behind Boris Johnson’s Brexit plan, boosting hopes that the UK can achieve a smooth transition out of the EU early next year. Boris Johnson said that every Conservative candidate has signed a pledge to vote for his Brexit deal if elected in the election on 12th December. This news combined with polls showing that the Conservatives held a comfortable lead over the Labour Party leader Jeremy Corbyn raised confidence that the UK will leave the EU with a deal on 31st January.
The pounds performance over the past few months has been closely linked to the idea that if a withdrawal agreement passes through Parliament and a Brexit deal achieved, the pound will rally. A Conservative majority is the best outcome for the pound as it would remove the uncertainty linked to a no deal Brexit or another delay in Brexit.
Today there is no high impacting UK macro data. Investors will continue to concentrate on the UK election and headlines that a trade deal with the EU could be very limited. Investors may also glance towards Confederation of British Industry (CBI) sales data for further clues over the health of the British consumer.
Will Construction Data Hit The Euro?
The euro moved broadly higher versus its peers on Monday, just not versus the pound. Whilst trade headlines weighed on risk sentiment comments from Slovenian European Central Bank chief Bostjan Vasle supported the price off the euro. Vasle said that eurozone growth had stabalised and that the ECB’s recent stimulus programme is working as intended. He saw no reason to change the growth outlook again. However, Vasle acknowledged that the ECB’s space for further stimulus is limited, putting a great burden on fiscal stimulus from European governments. The prospect of fiscal stimulus lifted the euro.
Today the euro could extend losses as investors look towards eurozone construction output. Any signs that the construction sector is dragging could weigh on demand for the euro.
| What do these figures mean? |
| When measuring the value of a pair of currencies, one set equals 1 unit and the other shows the current equivalent. As the market moves, the amount will vary from minute to minute.
For example, it could be written: 1 GBP = 1.13990 EUR Here, £1 is equivalent to approximately €1.14. This specifically measures the pound’s worth against the euro. If the euro amount increases in this pairing, it’s positive for the pound . Or, if you were looking at it the other way around: 1 EUR = 0.87271 GBP In this example, €1 is equivalent to approximately £0.87. This measures the euro’s worth versus the British pound. If the sterling number gets larger, it’s good news for the euro. |
