The British pound is higher against the euro on Monday.
The pound got the edge over the euro in muted holiday trading with UK and US stocks closed for the Spring Bank holiday and Memorial Day respectively. Sterling pushed higher, brushing off a media storm over Dominic Cummings, the Prime Minister’s chief advisor supposedly breaking lockdown rules.
GBP/EUR was higher by 26 pips (+0.24%) to 1.1193 as of 4pm GMT.
The currency pair traded in a narrow 20-pip range from 1.117 to 1.119 throughout the day in muted market volatility. Last week it was also little changed, falling just -0.23%.
GBP: Cummings furore just political
The political furore over Dominic Cumming’s trip to Durham was ignored by the traders still at their desks in the City of London on the UK Bank Holiday. The idea of double standards for those in power is not popular with the public but for now the markets are assessing the potential for wider political fallout as limited.
Were the chief advisor to the Prime Minister to leave, it may affect the course of policy but with such a large majority, the Conservative government should be in place for the next five years, which provides – outside of Brexit – a sense of overall political stability.
EUR: Lombardy region reports no new deaths
The mood in markets was positive and that suited the pound which is generally perceived by traders as riskier to hold than the euro. Japan lifting its nationwide lockdown was a symbolic move in the easing of lockdown restrictions across the world as countries bring the pandemic under control. An escalation of the US-China trade war is a risk that is bubbling away in the background that has so far not spilled over into any serious market upset.
Good news of zero new deaths from Italy’s Lombardi region – the original region hit hard in Europe was welcomed in European stock markets. Germany’s DAX index hit its highest since March 6. The lack of economic data surrounding the US holiday meant the euro was little changed in response to the news.