The pound rallied hard versus the euro as the UK Conservatives win a solid majority in the UK general election. The pound euro exchange rate soared 1.6% to close Thursday at €1.2048, it highest level since just after the a Brexit referendum in July 2016. The pair has pushed marginally higher in early trade on Friday.
Leader of the Conservatives, Boris Johnson, won the UK general election. At the time of writing he has 361 seats, compared to Labour leader Jeremy Corbyn’s 202 seats, with 5 seats yet to be declared. This was the best performance by a Conservative leader since 1987 and the worst performance by a Labour leader in modern history, as the people of the UK voted to get Brexit done.
The solid majority that Boris Johnson secured means an end to the political paralyses that has gridlocked Parliament since Theresa May lost her working majority in 2017. For Brexit, this means that Boris Johnson’s Brexit deal will almost certainly be ratified quickly enabling the UK to leave the EU by 31st January with a deal in place, bringing to an end three and a half years on lingering Brexit uncertainty which has dragged on the UK economy.
Furthermore, Boris Johnson’s strong majority will give him some breathing space with extending the transition period. His majority will most likely drown out the European Research Group and could result in a softer Brexit.
Brexit aside, large working majorities have historically been good for the pound across the past 40 years.
Euro Digests ECB, Election, Trade
The euro moved broadly higher following the election vote, but less so that the pound. This is because eurozone economies will also benefit from a smooth Brexit that a strong majority Tory Government is expected to bring.
Earlier in the previous session, euro investors had also digested the European Central Bank (ECB) monetary policy announcement; the first with Christine Lagarde at the helm of the central bank. As expected, the ECB voted to keep monetary policy unchanged.
Christine Lagarde set out to maintain her predecessor ultra-loose policy whilst sounding upbeat in tone on the eurozone economy. She rejected fear that the eurozone economy could slip into a prolonged period of low rates, growth and inflation.
There is no high impacting eurozone data to be released today. Euro investors will continue digesting UK election cometary and news that a US — China trade deal has been agreed in principal.
| 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. |
