The EUR GBP exchange rate continued to fall this morning despite the Greek government finally agreeing to return to the negotiating table to discuss further reforms in order to release funding from its creditors.
The further weakness in the Euro today has been prompted by the growing support for Marine Le Pen, leader of the far-right National Front party in France.
Le Pen has been rapidly gaining support in polls, with yesterday’s daily OpinionWay poll showing that support for Le Pen in the first round is now around 27% and while she is still trailing slightly against independent front-runner Emmanuel Macron in second round polls by 42% to 58%, the gap is significantly smaller than a few weeks ago.
Investors fear that the election of Le Pen in May’s Presidential elections could pave the way for France to leave the EU in a similar move to the UK.
As its second largest economy, France’s exit would be disastrous for the Eurozone and the single currency, especially if the populist leader follows through with her plan to invite other dissatisfied EU members to leave the Euro and form a new basket of currencies.
Meanwhile Sterling sentiment continues improving on the hope that the House of Lords will not give a free pass to the government’s Brexit bill as it passes through the upper house.
With the Conservatives lacking an outright majority in the Lords, investors are optimistic about the chance of opposition peers affixing a number of amendments to the bill before they allow it to pass.
One key proposal that the Lords are expected to table is that parliament should be given a final vote on the terms of the government’s deal to leave the EU, with markets hopeful that this would prevent Theresa May from pursuing a ‘hard Brexit’.
Meanwhile the Pound’s advance may be cut short later this morning as the Bank of England (BoE) Governor faces the parliament’s Treasury Committee, where he is likely to be grilled on the Bank’s commitment to ultra-low interest rates.
However the Euro may struggle to take advantage of the Pound’s weakness as German Business Sentiment is expected to fall in tomorrow’s report, with the rise of populism across Europe prompting companies to worry about future stability.
Current Interbank Exchange Rates
At the time of writing the EUR GBP exchange rate was trending around 0.84 and the GBP EUR exchange rate was trending around 1.17.
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