June 6, 2022 - Written by John Cameron
STORY LINK Pound Euro Exchange Rate News: GBP/EUR Rises as Boris Johnson to Face No-Confidence Vote
GBP/EUR Climbs as No Confidence Vote Called
The Pound Euro (GBP/EUR) exchange rate is trading higher today following the news that Boris Johnson will face a no-confidence vote later this evening.
At the time of writing, the GBP/EUR exchange rate is trading at approximately €1.17, up roughly 0.4% from today’s opening levels.
Pound (GBP) Buoyed by No-Confidence
The Pound (GBP) is gaining ground against the Euro (EUR) today as UK Prime Minister Boris Johnson braces for no confidence vote.
The vote will be held this evening after months of uncertainty surrounding the ‘partygate’ scandal.
After significant speculation which has weighed on the Pound in recent weeks, it was confirmed this morning that over 54 Conservative MP’s have submitted a letter of no confidence to the 1922 committee to trigger the vote.
Former Treasury Minister and Conservative MP, Jesse Norman, has publicly announced that he no longer has confidence in Johnson. In his letter to the 1922 committee, Norman stated:
‘I have always been deeply committed to public service. But recent events have served to clarify the position this country is in under your leadership, beyond any doubt; and I am afraid I can see no circumstances in which I could serve in a government led by you.’
The news has actually bolstered the Pound however as GBP investors are confident the PM will win the vote and would see him protected against another vote for a year.
Euro (EUR) Subdued as ECB Takes Focus
The Euro is trading lower against the Pound today as EUR investors turn their attention to the European Central Bank (ECB).
Later this week, the ECB is scheduled to deliver its latest interest rate decision. At present, the bank is expected to maintain the current interest rate of 0%.
According to Bloomberg economics: ‘The majority of the Governing Council seems to be in support of a smaller move, but market participants will be closely watching remarks after the ECB’s meeting on June 9 for hints that the hawks are once more gaining the upper hand.’
If the bank delivers some hawkish forward guidance, it may improve interest rate hike bets in the near-term. At present, the ECB is expected to begin the process of ending bond purchases, ready to increase interest rates next month.
This comes as inflation across the bloc jumped to 8.1% in April – driven by both the Ukraine crisis and the residue of the Covid pandemic – which is significantly higher than the ECB’s target rate of 2%.
If the ECB signals it is open to a 50bps hike next month, the Euro could surge.
GBP/EUR Exchange Rate Forecast: Will Boris Johnson be Ousted?
Looking ahead, the Pound Euro exchange rate will almost undoubtedly be driven by the UK’s vote of no confidence this evening.
Assuming Johnson survives the vote, this morning’s uptrend in the Pound could be extended. However, if Johnson is ousted, it is likely to unsettle GBP investors and weigh heavily on the Pound’s potential.
Later in the week, the Euro may be impacted by the ECB’s interest rate decision and the bank’s following forward guidance: will a hawkish tone underpin EUR exchange rates?
On the data front, the single currency may be buoyed by the third estimate of the first quarter’s Eurozone GDP, should a 0.3% expansion be confirmed.
International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way,
ensuring you get the best exchange rates on your currency requirements.
TAGS: Pound Euro Forecasts