Pound to Euro Steady on UK Election Night

Modified: Thursday, 7 May 2026 22:01 BST - Written by Tim Boyer

STORY LINK Pound to Euro Steady on UK Election Night

The Pound to Euro (GBP/EUR) exchange rate struggled to find momentum on Thursday as investors adopted a cautious stance ahead of key political developments in the UK.

At the time of writing, the GBP/EUR exchange rate was trading near €1.1572, little changed from Thursday’s opening levels.

Sterling traded without a clear trajectory on Thursday as markets kept a close eye on the UK’s local elections while continuing to assess volatility in the bond market.

Investor attention remained centred on UK gilt yields, which have climbed sharply in recent days amid mounting concerns surrounding the country’s fiscal outlook and political stability.

Earlier in the week, long-term borrowing costs briefly reached levels not seen since the late 1990s as traders demanded higher returns to hold UK government debt.

The local elections are seen as a potential flashpoint for markets, with fears that a disappointing result for Labour could increase pressure on Prime Minister Keir Starmer and fuel speculation over possible changes to future fiscal policy.

The Euro (EUR) remained broadly steady through Thursday’s European session, with encouraging German data helping to counterbalance softer expectations for additional European Central Bank rate hikes.

Germany’s latest factory orders figures surprised to the upside, with orders jumping by 5% in March and significantly outperforming market forecasts. The stronger reading offered some reassurance over the resilience of the Eurozone’s largest economy.

At the same time, improving sentiment surrounding potential US-Iran negotiations encouraged investors to move back into riskier assets, limiting demand for the traditionally defensive Euro.

Hopes that tensions in the Middle East may ease and shipping routes through the Strait of Hormuz could normalise also prompted markets to trim some of their more aggressive expectations for further tightening from the European Central Bank (ECB).

Near-Term GBP/EUR Forecast: Election Results Could Drive Sterling Volatility

Looking ahead, the Pound to Euro exchange rate may experience increased volatility as results from the UK local elections begin to emerge.

Sterling could come under pressure if political uncertainty intensifies and triggers another rise in UK bond yields.

For the Euro, attention will turn to Germany’s latest industrial production figures, while a scheduled speech from ECB President Christine Lagarde may also influence market sentiment heading into the weekend.

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TAGS: Pound Euro Forecasts