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Pound Euro Exchange Rate Steady, Could Labour’s Rise in Opinion Polls Weaken Sterling?

GBP/EUR Exchange Rate Rangebound, UK Political Developments in Focus

The Pound Euro (GBP/EUR) exchange rate held steady today, with the pairing currently trading around €1.167 as Britain’s political developments continue to remain in focus ahead of the 12th December general election.

If tonight’s influential YouGov results poll shows Labour gaining more ground on the Conservatives, we could see Sterling begin to sink against the single currency on heightened concerns over a hung parliament next month.

A Conservative victory is generally considered Pound-positive, due to their pro-enterprise policies and expectations that they will deliver an end to Brexit uncertainty, so a sinking Tory majority would weaken the GBP/EUR exchange rate.

Last night was the final chance to register to vote, and with a surge in young people’s registrations – with polls showing that a younger electorate is more favourable to Labour – this could provide a boost for the opposition party.

Jess Garland, Director of Policy and Research at the Electoral Reform Society, commented:

‘We’re seeing a major uplift in new registrations compared to the last election, with large numbers of young people signing up too – a traditionally under-registered demographic. It’s vital we close the demographic divides in terms of who is registered. This is a strong start.’

EUR/GBP Exchange Rate Steady, ECB Dismiss Potential Interest Rate Hikes as a ‘Mistake’

The Euro (EUR) remained subdued today after the French central bank Governor, Francois Villeroy de Galhau, commented that raising the European Central Bank’s (ECB) interest rates would be a mistake due to slowing Eurozone inflation.

Mr Villeroy commented:

‘Markets anticipate, reasonably in my view, that short-term rates are close to bottoming out. These low short-term rates must and will remain in place: it would undeniably be a mistake to raise ECB rates now.’

In Eurozone economic data, today saw the publication of October’s German import price index, which fell from 0.6% to -0.1% month-on-month and eased by -3.5% on the year.

The bloc’s economy continues to remain a concern for investors, with Germany’s factory sector remaining in recession with ongoing uncertainty around US-China trade relations continuing to haunt the Eurozone’s powerhouse economy.

GBP/EUR Outlook: Could Improving German Inflation Boost the Euro?

Euro (EUR) investors will be looking ahead to tomorrow’s release of the flash German inflation figure, which is expected to improve from 0.9% to 1.2% on the year.

As a result, we could see the EUR/GBP exchange edge higher on rising hopes for the Eurozone’s powerhouse economy’s recovery.

Tomorrow will also see the publication of the Eurozone’s business climate figure for November, which is expected to sink to -0.14.

The ECB will remain in focus, however, with any comments on monetary policy going forward remaining firmly in the spotlight for Euro traders.

The GBP/EUR exchange rate will continue to be drive-by political developments this week, with any indications that the Labour could rise in the opinion polls ahead of December likely to weaken market confidence in the Pound.