{"id":3940,"date":"2017-09-25T00:00:00","date_gmt":"2017-09-25T04:00:00","guid":{"rendered":"https:\/\/currencylive.com\/100153-gbp-eur-merkel-coalition\/"},"modified":"2017-09-25T00:00:00","modified_gmt":"2017-09-25T04:00:00","slug":"100153-gbp-eur-merkel-coalition","status":"publish","type":"post","link":"https:\/\/currencylive.com\/news\/100153-gbp-eur-merkel-coalition\/","title":{"rendered":"Euro Drops Versus Pound as Merkel’s Party Looks to Form 3 Party Coalit"},"content":{"rendered":"

The pound euro exchange rate kicked off the week in a volatile fashion. Investors were grappling with the news that German Chancellor Angela Merkel was headed for her fourth term, although her party\u2019s performance was the worst it\u2019s been since 1949. The euro sunk against the pound in a knee -jerk reaction to the news. As a result, the pound euro exchange rate is now trading 0.4% higher for the pound at \u20ac1.1340, as it continues to hover around recent 2 month highs.<\/p>\n\n\n\n\n\n
What do these figures mean? <\/th>\n<\/tr>\n<\/thead>\n
\n

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. <\/p>\n

For example, it could be written: 1 GBP = 1.13990 EUR<\/em> <\/p>\n

Here, \u00a31 is equivalent to approximately \u20ac1.14. This specifically measures the pound\u2019s worth against the euro. If the euro amount increases in this pairing, it\u2019s positive for the pound.<\/em> <\/p>\n

Or, if you were looking at it the other way around: 1 EUR = 0.87271 GBP<\/em> <\/p>\n

In this example, \u20ac1 is equivalent to approximately \u00a30.87. This measures the euro\u2019s worth versus the British pound. If the sterling number gets larger, it\u2019s good news for the euro.<\/em> <\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table class=\"table table-bordered\">\n

Following a key speech from UK Prime Minister Theresa May last week, the pound had eased back slightly following her comments about Brexit. Although the speech provided clarity in some areas, it provided no clarity in others. However, if the aim of the speech was to kick-start stalled negotiation talks, then it might well have been just enough. Still, it may fall short of allowing talks to progress to the second phase of negotiations; which includes discussing the future relationship between the EU and the UK.<\/p>\n

Overall, however, the speech offered little fresh substance, which is why the pound slightly dropped following the speech. Brexit negotiators will travel back to Brussels today and attempt to flesh out May\u2019s constructive shift, hopefully aiming towards a smooth Brexit – which will be pound-positive.<\/p>\n\n\n\n\n\n
Why is a smooth Brexit good for the pound? <\/th>\n<\/tr>\n<\/thead>\n
A smoother Brexit would be a scenario in which the economic consequences of leaving the European Union are minimised. This is favourable for the pound because the less the Brexit impact on the economy, the more likely that foreign investors will remain interested in the UK. Foreign investors need sterling to invest in the country and so the more GBP is purchased, the higher the demand and, thus, an increase in the currency\u2019s value. <\/td>\n<\/tr>\n<\/tbody>\n<\/table class=\"table table-bordered\">\n

<\/a>Euro declines as Merkel\u2019s Power Weakens<\/h2>\n

The euro dropped sharply on the day\u2019s open following the German election results. Angela Merkel won for the fourth time, but her party\u2019s margin was smaller than the polls\u2019 forecasted figure of 32.5%. Germany\u2019s far-right political parties also performed much better than expected. Winning over 13% of the votes, the party took seats in Parliament for the first time since the WWII.<\/p>\n

As expected, because Merkel\u2019s party didn\u2019t win a large enough majority, a coalition will need to be formed. The overriding concern for the euro now is what type of coalition Merkel\u2019s party and the Christian Democratic Union (CDU) will manage to form. The second largest party, the Social Democratic Party (SDP ), has already said that they will remain as opposition. Meanwhile, smaller parties like the Green Party and the Free Democratic Party (FDP) have said they are willing to talk with the CDU. Should this momentum remain, a coalition could be formed fairly quickly between the CDU, FDP and Green party. Rapid progress in the coalition formation process will calm jittery investors and could offer support to the euro.<\/p>\n\n\n\n
\n


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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":"

The pound euro exchange rate kicked off the week in a volatile fashion. Investors were grappling with the news that German Chancellor Angela Merkel was headed for her fourth term, although her party\u2019s performance was the worst it\u2019s been since 1949. The euro sunk against the pound in a knee -jerk reaction to the news. […]<\/p>\n","protected":false},"author":163946597,"featured_media":3941,"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-3940","post","type-post","status-publish","format-standard","has-post-thumbnail","category-eur","category-gbp","tag-eur","tag-gbp"],"acf":[],"yoast_head":"\nEuro Drops Versus Pound as Merkel's Party Looks to Form 3 Party Coalit - 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\/100153-gbp-eur-merkel-coalition\/\" \/>\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=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100153-gbp-eur-merkel-coalition\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100153-gbp-eur-merkel-coalition\\\/\"},\"author\":{\"name\":\"Fiona Cincotta\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/#\\\/schema\\\/person\\\/8ef0fafb6c93f1204150bb907b42cfec\"},\"headline\":\"Euro Drops Versus Pound as Merkel’s Party Looks to Form 3 Party Coalit\",\"datePublished\":\"2017-09-25T04:00:00+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100153-gbp-eur-merkel-coalition\\\/\"},\"wordCount\":774,\"image\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100153-gbp-eur-merkel-coalition\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/currencylive.com\\\/news\\\/wp-content\\\/uploads\\\/2019\\\/08\\\/100153-gbp-eur-merkel-coalition.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\\\/100153-gbp-eur-merkel-coalition\\\/\",\"url\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100153-gbp-eur-merkel-coalition\\\/\",\"name\":\"Euro Drops Versus Pound as Merkel's Party Looks to Form 3 Party Coalit - 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