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With the Conservative’s lead over labour falling in the latest polls, the pound edged lower as a new week of trading began.
GBP/EUR hit a low of €1.1587 (down from opening levels of €1.1611), GBP/USD eased from a high of $1.3010 to $1.2973, GBP/AUD lost 0.3% to trade in the region of AU$1.7412 and GBP/NZD plummeted over 0.7% to hit a low of NZ$1.8667.
How did the latest election news weaken the pound? Keep scrolling to find out…
What’s been happening?
Monday’s pound losses were largely due to the news that the latest polls relating to the fast-approaching UK general election revealed a decline in the Conservative lead following the publication of the party manifestos.
According to Reuters; ‘May had been on course for a landslide with a majority of up to 150 seats, opinion polls had indicated in the early stages of campaigning ahead of the June 8 national vote.
Four polls on Saturday however showed the Conservatives with an expected vote share of between 44 and 46 percent, still easily ahead of the Labour Party on 33 to 35 percent, but pointing to a smaller projected majority of about 40 seats.’
As a greater Conservative majority is expected to improve the UK’s hand in Brexit negotiations, the news that the outcome might be tighter than previously projected left Sterling struggling.
The pound recorded losses against all the majors and fell back below $1.30 against the US dollar after previously benefiting from dovish interest rate related comments from a Federal Reserve official.
GBP/EUR was also floundering thanks to the news that Greek MPs had supported the introduction of more austerity in order to receive the nation’s next batch of financial aid.
Additional pound losses are likely if the Conservative lead narrows further over the next couple of weeks.
What’s coming up?
There isn’t much on the calendar today with the potential to inspire currency movement.
However, tomorrow is looking more interesting in terms of influential releases.
GBP/EUR could experience volatility in response to Germany’s final Q1 GDP data and the publication of manufacturing, services and composite PMIs for the Eurozone and its largest economies.
If the PMI releases point to slowing output it would reduce the likelihood of the European Central Bank (ECB) changing its current stance on monetary policy, potentially weakening the euro.
The UK, meanwhile, will be publishing its public finance figures while the US has Markit manufacturing, services and composite PMIs scheduled for release.
We’re here to talk currency whenever you need us, so get in touch if you want to know more about the latest news or how it could impact your currency transfers.
