The Pound to Euro exchange rate hit fresh lows in May last week, while further weakness could come on future general election polls.
Last week saw Labour, the Conservatives and the Liberal Democrats unveil their 2017 manifestos – all received a mixed reception.
As the Conservatives are the defending party, their manifesto was heavily scrutinised. In the context of a potential victory, policies affecting the elderly held particular interest.
Broadly speaking, a Conservative victory could be positive for the Pound, as it would represent the status quo. This is despite the manifesto seemingly supporting ‘Hard Brexit’, by asserting that ‘no deal is better than a bad deal’ in EU negotiations.
The three main elderly-affecting policies were plans to means-test the winter fuel allowance, one to downgrade the pensions triple lock to a double lock and one that factors in house prices to determine social care payments.
While touted as a way of making Britain ‘fairer’, the schemes could backfire, alienating much of the ‘grey vote’ and reducing the Conservative’s polling lead.
As the June 8th election draws ever closer, signs that the current Conservative lead is slipping could panic Pound traders. While Labour are not forecast to overtake the Tories in the polls, any signs of a narrowing gap may still trigger noticeable GBP losses.
The Euro’s advance against the Pound last week was partly caused by Greek developments, which may cause further near-term Euro movement.
Amid violent protests in Athens, the Greek parliament agreed to implement further austerity measures. This upheld their end of the latest bailout talks.
The real test is yet to come, however, as Greece’s creditors must also agree to grant more funds to the debt-riddled nation.
Amid the economic déjà vu and whispers of ‘Grexit’, the concern remains that this meeting could be different to previous ones.
The Greek debt crisis has been dragging on for years now, and the Greek economy remains in a fragile state due to the shock of continued austerity measures.
If lenders decide that enough is enough and that Greece’s debt is simply unsustainable, then they could hold off on granting more funding. This could send the Euro tumbling to historic lows against the Pound, as might eventually see Greece crash out of the Eurozone in a dramatic fashion.
Recent Interbank GBP EUR Exchange Rates
At the time of writing, the Pound to Euro (GBP EUR) exchange rate was trading down at 1.1632 and the Euro to Pound (EUR GBP) exchange rate was trading up at 0.8595.
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