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GBP EUR Exchange Rate: The Week Ahead July 10th

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After Boris Johnson confirmed his resignation, the GBP EUR exchange rate rallied from the recent support levels. In another disastrous week for Johnson, support for his leadership collapsed, ousting him. The pound sterling versus the euro rallied due to the end of uncertainty and the threats of a winter gas crisis in Europe. 

The GBP to EUR beaded for the 1.1800 level into the weekend after the best weekly performance since February. 

New leadership race boosts the pound sterling 

The resignation of Boris Johnson spurred substantial gains in the pound sterling versus the euro. 

There are many implications for the sterling. The first is to remove uncertainty and in-party fighting for the Conservative party. There will also be hopes that the Northern Ireland protocol wrangling can reach a more amicable compromise. Overall, relations with the EU and other trading partners may improve. 

There were rumours in the past that Boris and his Chancellor Rishi Sunak argued over the need for further economic stimulus in the country. The new Chancellor may have a different path to ease the strain on the UK economy. 

Business Secretary Kwasi Karteng said that the UK needed a new leader, “someone who can rebuild trust, heal the country” as well as set out a new economic approach, one that is both “sensible and consistent” to assist families.  

The Welsh first minister Mark Drakeford was “pleased to see the prime minister has now done the right thing and agreed to resign”. He highlighted the four nations’ need for a stable UK government. The UK can now see a more stable environment in the months ahead without the previous scandals. 

Pound sterling strength could continue in a data-light environment  

The week ahead could see further strength in the pound sterling due to a relatively light data week.  

Wednesday brings BRC retail sales for the UK and ZEW economic sentiment for the Eurozone and Germany. In the current environment, neither is likely to spring a major surprise. 

Thursday has potential for larger volatility with a 3-month GDP update for the UK economy in May. The pound may suffer if last month’s 0.2% growth dips into negative territory. The same day also sees inflation in the German economy with the potential to build on the recent 7.9% increase year-on-year.  

Analysts expect a dip to 7.6% this month, but other countries have not yet seen a cooling in prices. Inflation figures for France and Spain are also due that day and could put pressure on the European Central Bank if all are pointing higher. 

 Bank of England Governor Andrew Bailey said this week that the UK economic outlook “deteriorated markedly”, keeping some pressure on its economy. Analysts said that the UK could underperform Europe, but the looming energy crisis for the bloc may have significant implications. The Ukrainian conflict started in Spring; Russia could squeeze Europe as we head into the winter with their annual shutdowns for maintenance. 

To get in touch and receive further insight into the factors that could impact your overseas payments, click the button below and complete the form on the Lumon website.


The post GBP EUR Exchange Rate: The Week Ahead July 10th appeared first on Pound Sterling Forecast.


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