Pound-to-Euro Rises as Burnham Takes Office

Modified: Monday, 20 July 2026 20:01 BST - Written by Ben Hughes

STORY LINK Pound-to-Euro Rises as Burnham Takes Office

The Pound to Euro (GBP/EUR) exchange rate traded higher at the start of the week as investors reacted to Andy Burnham formally taking office as the UK's new Prime Minister.

At the time of writing, GBP/EUR was changing hands at around €1.1777, up roughly 0.2% from Monday's opening levels.

The Pound (GBP) opened the week on a positive footing as investors welcomed the prospect of greater political certainty following Andy Burnham's arrival in Downing Street.

The transition in leadership encouraged markets to continue unwinding some of the political risk premium that had weighed on Sterling in recent months, reflecting hopes that the change in government could bring a more stable domestic backdrop.

However, gains remained measured as traders waited for confirmation of Burnham's first Cabinet appointments, with the choice of Chancellor expected to provide the clearest indication of the government's fiscal priorities.

Investors are particularly keen to establish whether Burnham will favour a fiscally conservative candidate or someone viewed as more supportive of higher public spending.

Recent speculation suggesting Shabana Mahmood is the leading contender for the Treasury role has helped underpin Sterling, with markets viewing her as likely to maintain Labour's existing fiscal framework.

Nevertheless, many investors preferred to remain cautious until the Cabinet is formally unveiled, recognising that any unexpected appointment could quickly shift sentiment towards UK assets.

The Euro (EUR) struggled to attract demand on Monday following the publication of Germany's latest producer price index.

The report showed annual producer price inflation slowed from 2.2% to 1.8%, while monthly factory gate prices unexpectedly fell by 0.3%, a sharper decline than markets had anticipated.

The weaker figures suggested inflationary pressures in the Eurozone's largest economy may be easing, reducing expectations that the European Central Bank (ECB) will need to tighten monetary policy further later this year.

Near-Term GBP/EUR Forecast: UK Labour Market Report in Focus

Attention now turns to Tuesday's UK employment figures, which are expected to provide the next major catalyst for the Pound to Euro (GBP/EUR) exchange rate.

Economists forecast that the unemployment rate edged up from 4.9% to 5% in May. A softer labour market could undermine expectations of further Bank of England (BoE) policy tightening and weigh on Sterling.

Meanwhile, Euro investors will monitor Germany's latest ZEW economic sentiment survey.

If business confidence in Germany continues to improve, the resulting boost to sentiment could provide some support for the single currency.

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TAGS: Pound Euro Forecasts