- Pound (GBP) slips after Boris-inspired gains
- Domestic issues to keep GBP under pressure
- Euro (EUR) edges higher after 4 days of losses
- ECB Christine Lagarde to speak
The Pound Euro (GBP/EUR) exchange rate is falling on Friday snapping a four-day winning run. The pair rose +1% on Thursday, settling at €1.1828, after trading in a range between €1.1688 – €1.1711. At 08:45 UTC, GBP/EUR trades -0.11% at €1.1815
The pound rose yesterday following an announcement from Boris Johnson that he was resigning as the leader of the Conservative Party and as the Prime Minister. The move came after months of damaging headlines and after he lost the support of his party. The pound cheered the move.
Today, as the dust settles the pound is heading lower. The reality of his resignation is that the UK will now be in limbo whilst the leadership battle takes place.
There are as many as six candidates lining up to take over as the new Prime Minister. However, the process could take weeks if not months as the contest gets underway.
Further political uncertainty comes at a time when the UK economic outlook deteriorates as the cost of living crisis is expected to get worse and as relations with Europe regarding Brexit are strained.
There is no high impacting UK economic data due to be released today. Attention will remain on domestic events.
The euro has traded under pressure across the week amid fears of recession and amid growing concerns over energy security.
The minutes from latest ECB meeting minutes showed that policymakers are increasingly concerned over rising inflation and fear that it will become entrenched. The ECB is expected to raise interest rates by 0.25% in July but could look to raise rates by 0.5% in September unless inflation cools.
Today on the data front, Italian industrial production rose by less than expected at 3.4% year on year, down from 3.9% in April.
Looking ahead ECB President Christine Lagarde is due to speak and could shed more light on the central bank’s next steps.
