GBP and EUR Surge Amid Political Shifts in UK and France

Sterling and Euro appreciate as UK election results and French political dynamics influence Forex markets. BoE policy outlook and fiscal worries in focus.

Published on 10 July 2024

, 1 minute read

Here’s this week’s overview of the Euro and Sterling:

Sterling

Sterling traded at 1.28 against USD last week, a 1.25% appreciation which was largely down to a weaker dollar and the UK general election.

The UK election delivered a widely expected result with the Labour party winning a landslide majority of 170 seats, the confirmation of this majority caused GBP to firm, and this week will see the end of the BoE election blackout period. The focus will be back on the Bank of England’s policy outlook.

Euro

The Euro gained 0.85% against the dollar last week to trade at 1.083 on Friday.

Inflation and activity PMIs both came in on expectations with producer price inflation dropping by 0.2% in June. Much like the UK and US, the major news of last week was political with the French elections on Sunday.

A surprise left wing surge and the centrist block leap-frogging the far right, who were driven into third place, all driven by tactical voting, has led to a hung parliament and perhaps more questions than answers, with worries over French fiscal policy now emerging if the left takes control of parliament.

The situation will play out over the next few days and markets will be watching closely.

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