- Pound (GBP) surges on reopening optimism & political stability
- Ruling Tories perform well in elections & SNP fails to win outright majority
- Euro (EUR) slipped despite upbeat Eurozone sentiment numbers
- German ZEW sentiment data in focus
The Pound Euro (GBP/EUR) exchange rate is consolidating after an impressive run in the previous session. The pair surged across Monday settling +1.3% at €1.1640, the high of the day. At 05:45 UTC, GBP/EUR trades -0.05% at €1.1633.
The Pound surged in the previous session, out-performing its G10 peers for several reasons. Firstly, the Scottish National Party (SNP) won the regional elections in Scotland but failed to win an outright majority. Whilst the party will continue pushing for an independence referendum, the Pound is rising in a relief rally.
Furthermore, the ruling Conservative party performed well in local elections which brings additional political stability.
Secondly reopening optimism is driving the Pound higher. Prime Minister Boris Johnson announced the new easing measures on Monday. He confirmed that as from next week the UK will move to stage 3 of the roadmap to lifting restrictions. This means that pubs, bars and restaurants will be able to serve indoors, cinemas, museums and theatres will re-open. This all means that the UK economy should continue expanding in the coming months.
There is no high impacting UK data due to be released today. Investors will be listening carefully to Bank of England Governor Andrew Bailey when he speaks.
The Euro came under pressure in the previous session despite an upbeat Sentix Investor Confidence report. The investor sentiment report jumped in May to 21, its highest level since March 2018, up from 13.1 in April.
Even so, the prospect of the Eurozone economy turning a corner and rebounding from its current technical recession failed to boost the common currency.