The Pound has begun Wednesday’s session trending lower against the US Dollar (GBP/USD) and Euro (GBP/EUR) as UK political uncertainty continues. The Pound US Dollar exchange rate is trading in the region of 1.2633, while the Pound to Euro (GBP/EUR) exchange rate resides at levels of 1.1330.
Brexit Uncertainty Continues to Impact Pound Sterling Exchange Rate
As Theresa May attended her final EU leaders’ summit in Brussels yesterday, some of the bloc’s most senior politicians were quick to make political capital from the event. Donald Tusk’s claim that the EU’s handling of Brexit had vaccinated the bloc from scepticism may be seen as debatable given the notable gains for nationalists in the weekend’s elections and also has the potential to rile the UK’s new Prime Minister, assuming they come from a pro-Brexit standpoint. This is likely to put a no-deal Brexit back on the table which could be negative for the Pound, but given the uncertainty over where the European Union will have to head next in order to try and remain as a cohesive unit, the Euro’s near-term fortunes are far from being assured, either.
Euro Exchange Rate Forecast: EU Political Turmoil?
High on the agenda in Brussels yesterday was talk as to who would be appointed into the top jobs which become vacant later this year. This includes the EU Commission President and it has become apparent that Germany and France aren’t seeing eye-to-eye. Losses for the European People’s Party in last weekend’s elections means that any new President will have to take a more conciliatory line in order to maintain the support of a majority of MEPs. That has the potential to be disruptive when it comes to steering the future direction of the Union, and at least in the longer-term, could see pressure applied to the common currency.
GBP/USD, GBP/EUR, EUR/USD Exchange Rate Forecast
The Pound is trading just above lows for the year against the US Dollar, although losses aren’t building any further despite the safe-haven allure of the Greenback. The prospect of a new Prime Minister has to be seen as presenting some fresh opportunity, so this could help draw a line under further losses for Sterling.
The common currency has been struggling against the US Dollar since the start of the week. Uncertainty over where the European Union goes next, some lacklustre Eurozone economic data and the overhang of the ongoing US trade spat are combining to create little reason to back the common currency for now.
The Pound may have broken its record-breaking losing streak against the Euro in recent days, but there’s no suggestion that the cross is ready to engage in a quick rebound. Both currencies could be faced with a period of inertia as the political landscape unfolds. However, any decision as to who will be the UK’s next Prime Minister should progress quickly and their views on a no-deal Brexit could be instrumental in determining where the Pound goes from here.