GBP/EUR exchange rate spikes to six-month high on hopes for a Conservative majority
Philip McHugh November 28th 2019 - 2 minute read
The pound roared higher in the mid-week, after a key poll suggested the Conservatives will win a majority in the upcoming election.
Sterling is consolidating these gains this morning, with GBP/EUR stable at €1.1744, GBP/USD flat at $1.2931, and GBP/CAD flat at C$1.7190, while GBP/AUD and GBP/NZD hold steady at AU$1.9124 and NZ$2.0131 respectively.
Coming up today we have a couple of key Eurozone economic releases, which are likely to put the euro in focus.
What’s been happening?
The pound skyrocketed yesterday amid renewed hopes that the Tories will be able to secure a majority when voters go to the polls on 12th December.
This comes on the back of YouGov’s highly influential multilevel regression and post-stratification (MRP) opinion poll.
The poll, which correctly predicted Theresa May would lose her majority in 2017, suggested Boris Johnson is likely to win a convincing majority next month.
Meanwhile, the US dollar traded higher on Wednesday on the back of some upbeat domestic data.
The latest estimate of US GDP saw growth revised up from 1.9% to 2.1% in the third quarter, while durable goods orders also surprised on the upside as order growth jumped from -1.4% to 0.6%, defying forecasts it would contract again in October.
The broad strength of the US dollar negatively impacted the euro yesterday, which was already struggling amidst a lull in economic data.
What’s coming up?
Looking ahead, the euro will be in focus today following a couple of key data releases.
First up is the Eurozone’s latest economic sentiment figures, which could lend some modest support to the single currency this morning if business confidence improved this month in line with expectations.
However potentially more influential will be the publication of Germany’s consumer price index later this afternoon, with a slump in month-on-month inflation in November potentially putting the brakes on the euro.
In the continued absence of any notable UK economic data, we can expect UK politics to remain the key catalyst of movement in the pound today, potentially infusing further volatility into the currency.
Finally, we may see the US dollar struggle today as the closure of US markets for Thanksgiving creates thin trading conditions for USD.