British political developments drove the pound across the previous week. The pound surged 1.18% versus the euro hitting a 31-month high of €1.1891. This was the second straight week of gains for the pound, which has also advanced every month since August versus the euro.
Sterling has been trending higher amid the growing belief that the Tories will secure an overall majority in the elections on Thursday this week. The latest YouGov poll put the Conservatives ahead by a solid 11 points. The Conservatives have managed to maintain a strong lead for a couple of weeks now. There had been concerns that as the election drew closer, Labour could see a late surge in support, but so far that hasn’t materialised.
With the election just days away, UK political developments will remain very much in focus this week. There could be heightened volatility in the pound over these coming days. Any signs of a shit in voting intentions could result in fairly dramatic moves in sterling. Labour advancing in the opinion polls could put pressure on the pound. Clues that the Conservatives will win with a larger majority could boost the pound. This is because a Tory majority is being tied to Boris Johnson’s Brexit bill swiftly moving through Parliament to ensure the UK leaves the EU early next year with a deal in place.
Investors Look To Thursday’s ECB Meeting
The euro was under pressure across the previous week as the eurozone economy showed few signs of improving. German factory orders continued to slide, industrial production in Europe’s largest economy was also dismal and eurozone retail sales surprised to the downside. The disappointing data releases came following slightly more encouraging pmi readings at the start of the week.
Eurozone data will remain under the spotlight as investors continue to attempt to gauge whether the slowdown in the bloc’s economy is stabilising. German trade balance ad eurozone business sentiment figures are due to be released today.
However, the main event for euro investors will be the European Central Bank’s monetary policy meeting on Thursday. This will be Christine Lagarde’s first meeting as Chair. Analysts are not expecting any changes to be made to monetary policy, instead the focus will be on a strategic review.
|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.