{"id":3706,"date":"2017-06-13T00:00:00","date_gmt":"2017-06-13T04:00:00","guid":{"rendered":"https:\/\/currencylive.com\/100097-gbp-eur-politics-influence-dive\/"},"modified":"2017-06-13T00:00:00","modified_gmt":"2017-06-13T04:00:00","slug":"100097-gbp-eur-politics-influence-dive","status":"publish","type":"post","link":"https:\/\/currencylive.com\/news\/100097-gbp-eur-politics-influence-dive\/","title":{"rendered":"Pound Dives Against Euro as Politics Drive the Currency Pair"},"content":{"rendered":"<p>The pound has continued to fall versus the euro as politics drive the currency pair. Political uncertainty in the UK following the general election is pushing sterling lower, whilst political success for Macron\u2019s party in Parliamentary elections is boosting the euro higher.<\/p>\n<p>The pound euro exchange rate dropped a further 100 points on Monday, taking the rate from a high of \u20ac1.1388 to a day\u2019s low of \u20ac1.1281. Sterling dropped past the lowest point reached on Friday immediately following the release of the UK election results.As a lack of political stability weighs, this is the weakest level that the pound has traded against the euro for 7 months.<\/p>\n<table class=\"table table-bordered\">\n<thead>\n<tr>\n<th>How does political stability boost a currency? <\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Political stability boosts both consumer and business confidence, which means corporations and regular households alike are more likely to spend money. The increased spending, in turn, then boosts the economy. Foreign investors prefer to invest their money in politically stable countries as well as those with strong economies. For foreign investors to put their money into an economy, they need local currency. As the acquire the money needed, the demand for that particular currency increases, which then boosts its value. <\/td>\n<\/tr>\n<\/tbody>\n<\/table class=\"table table-bordered\">\n<p>Investors will continue to watch for any UK political developments, most likely putting economic data releases on the backburner. Under normal circumstances, the release of UK inflation data later this morning would be expected to impact the pound\u2019s current value. However, given the fragile political outlook, investors are expected to focus on when Brexit talks will be beginning and whether the Conservatives can finalise the agreement with the Democratic Unionist Party (DUP).<\/p>\n<h2><a href=\"#euro-rallies-as-macron-succeeds-in-first-round-parliamentary-elections\" name=\"euro-rallies-as-macron-succeeds-in-first-round-parliamentary-elections\"><\/a>Euro rallies as Macron succeeds in first round Parliamentary elections<\/h2>\n<p>In sharp contrast, the euro is going from strength to strength. French President Macron\u2019s newly formed political party <em>En Marche! performed extremely well in the first round of the French Parliamentary elections. Strong results have bolstered confidence in Macron and, should his party perform well in the second round on 18th June, Macron will then have solid support in Parliament to push through his ambitious economic and political agendas. Analysts are currently forecasting that he could win up to 455 of the 577 seats available.<\/em><\/p>\n<p>From a Forex perspective, the euro is looking stable compared to its peers the pound and the U.S. dollar. Firstly, eurozone political risk has significantly subdued for the time being. Secondly, eurozone economic data has been solid. Thirdly, the European Central Bank has been very slowly making signs of moving towards interest rate normalisation. Or, in other words, returning to historically normal levels of interest rates.<\/p>\n<table class=\"table table-bordered\">\n<thead>\n<tr>\n<th>Why do raised interest rates boost a currency\u2019s value? <\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Interest rates are key to understanding exchange rate movements. Those who have large sums of money to invest want the highest return on their investments. Higher interest rate environments tend to offer higher yields. So, if the interest rate or at least the interest rate expectation of a country is relatively higher compared to another, then it attracts more foreign capital investment. Large corporations and investors need local currency to invest. So more local currency used then boosts the demand of that currency, pushing its value higher. <\/td>\n<\/tr>\n<\/tbody>\n<\/table class=\"table table-bordered\">\n<p><small><em><br \/>\nThis publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Inc., Currency Live or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date. Consult our <a href=\"https:\/\/currencylive.com\/risk-warning\/\">risk warning<\/a> page for more details.<\/em><\/small><\/p>\n<p><small><em>This article was initially published on TransferWise.com from the same author. The content at Currency Live is the sole opinion of the authors and in no way reflects the views of TransferWise Inc.<\/em><\/small><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The pound has continued to fall versus the euro as politics drive the currency pair. Political uncertainty in the UK following the general election is pushing sterling lower, whilst political success for Macron\u2019s party in Parliamentary elections is boosting the euro higher. The pound euro exchange rate dropped a further 100 points on Monday, taking [&hellip;]<\/p>\n","protected":false},"author":163946597,"featured_media":3707,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1380,1379],"tags":[1395,1394],"class_list":["post-3706","post","type-post","status-publish","format-standard","has-post-thumbnail","category-eur","category-gbp","tag-eur","tag-gbp"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.0 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Pound Dives Against Euro as Politics Drive the Currency Pair - Currency Live<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/currencylive.com\/news\/100097-gbp-eur-politics-influence-dive\/\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Fiona Cincotta\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100097-gbp-eur-politics-influence-dive\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100097-gbp-eur-politics-influence-dive\\\/\"},\"author\":{\"name\":\"Fiona Cincotta\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/#\\\/schema\\\/person\\\/8ef0fafb6c93f1204150bb907b42cfec\"},\"headline\":\"Pound Dives Against Euro as Politics Drive the Currency Pair\",\"datePublished\":\"2017-06-13T04:00:00+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100097-gbp-eur-politics-influence-dive\\\/\"},\"wordCount\":691,\"image\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100097-gbp-eur-politics-influence-dive\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/currencylive.com\\\/news\\\/wp-content\\\/uploads\\\/2019\\\/08\\\/100097-gbp-eur-politics-influence.jpg\",\"keywords\":[\"eur\",\"gbp\"],\"articleSection\":[\"EUR\",\"GBP\"],\"inLanguage\":\"en-US\",\"copyrightYear\":\"2017\",\"copyrightHolder\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/#organization\"}},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100097-gbp-eur-politics-influence-dive\\\/\",\"url\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100097-gbp-eur-politics-influence-dive\\\/\",\"name\":\"Pound Dives Against Euro as Politics Drive the Currency Pair - 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