Skip to content

17th June 2024 | Join our live webinar: Navigating GBPEUR highs & UK election impact

This week’s headlines:

  • GBPEUR Levels: The GBPEUR exchange rate hit a 23-month high last week. Contributing factors include uncertainty surrounding the French election and a stronger US dollar.
  • Bank of England Interest Rate Decision: The Bank of England is expected to hold interest rates at 5.25%. This decision comes during the UK election blackout period. There are no cuts forecasted until August, raising questions about whether the pound will maintain its strength.
  • UK Inflation Data: The data could significantly impact the outlook for UK interest rates. While inflation is expected to fall, it’s uncertain if the decline will be enough to justify the anticipated rate cut in August.
  • UK Election: The UK election is just 17 days away. Historical research indicates that exchange rates (GBPEUR and GBPUSD) could experience over 5% movement in the lead-up to and aftermath of the election.
  • French Election: The French election is 13 days away. Similar research shows that the GBPEUR exchange rate could see over 4% movement around the French legislative elections, with the first round on June 30th and the second round on July 7th.

In-Depth Report:

The GBPEUR exchange rate surged to a 23-month high last week, driven by a combination of factors, including uncertainty surrounding the upcoming French election and the strength of the US dollar. The political landscape in France is creating volatility, and investors are closely watching the developments.

Meanwhile, the Bank of England is expected to maintain interest rates at 5.25%. This decision is particularly notable as it coincides with the UK election blackout period, a time when major policy announcements are typically avoided. With no rate cuts forecasted until August, there is growing speculation about whether the pound will be able to maintain its current strength in the coming months.

In other economic news, UK inflation data, scheduled for release on Wednesday, could significantly influence the future direction of UK interest rates. While inflation is expected to fall, it remains uncertain whether the decline will be sufficient to justify the anticipated rate cut in August. This data release is being watched closely by analysts and investors alike, as it could have broad implications for the UK economy.

The UK election, now just 17 days away, adds another layer of complexity to the economic outlook. Historical research indicates that exchange rates, including GBPEUR and GBPUSD, could experience significant movement—over 5%—in the lead-up to and aftermath of the election. Political uncertainty typically translates to market volatility, and this election is expected to be no different.

Across the Channel, the French election is set to take place in 13 days, with legislative elections scheduled for June 30th and July 7th. Research suggests that the GBPEUR exchange rate could see movements exceeding 4% around these dates. The outcome of the French election is crucial, as it will shape France’s economic policies and its relationship with the European Union, thereby impacting the euro.

In summary, the current financial landscape is marked by a high degree of uncertainty due to upcoming elections in both the UK and France, potential shifts in central bank policies, and key economic data releases. Investors are advised to stay informed and be prepared for potential market fluctuations as these events unfold. The coming weeks promise to be a critical period for the GBPEUR exchange rate and broader financial markets.