- Posted by currencies in Bank of England, Brexit, Currency, Dollar, Economy, EUR, GBP, Sterling, UK, Uncategorised
- March 19, 2018
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Sterling was flat in a big week for the British currency with employment and inflation data due, followed by a crucial summit between European and British officials to secure a Brexit transition arrangement.
The Pound to Euro exchange rate has gained today, in the aftermath of the Italian general election that resulted in a hung parliament.
This outcome remains a restrictive factor in Euro to Pound movement, given how it could negatively impact the Eurozone as a whole.
While concerns about Germany’s government after the September 2017 election have now dissipated, they have immediately been replaced by speculation about the Italian vote.
The ballot on 4th March saw no party emerge with an overall majority, and mainstream parties lose votes to more radical ‘outsider’ factions.
The other reason the pound has gained against the Euro today is due to growing optimism about a potential reduction in UK interest rates this week.
Although slowing UK inflation implies reduced chances of a near-term UK interest rate hike from the Bank of England (BoE), it also means better conditions for UK consumers.
This can lead to higher levels of spending and engagement in services, which in the long-term could provide a greater boost to the value of the Pound.