Multi-week lows for GBP on prospect of hung parliament

Sterling spiralled to multi-week lows against all the major currencies at the close of last week as unexpectedly tight election polls left the outcome of June’s vote in doubt.

GBP/EUR dropped to a two-month low of €1.1432, GBP/USD slumped to one-month low of $1.2783, GBP/AUD brushed a worst rate of AU$1.7173, GBP/NZD tumbled to a six-week low of NZ$1.8115 and GBP/CAD was left trading in the region of C$1.7201.

Has the pound got further to fall? Keep scrolling to find out...

What’s been happening?

The pound (like the rest of us) was left really feeling the need for the Bank Holiday weekend, having experienced a bit of a dismal end to the week.

The resumption of political campaigning and the publication of the latest election polls conspired to send Sterling lower across the board.

The polls showed that Conservative's lead against Labour had plummeted from 20 to 5 in just a matter of weeks.

Concerns that the election could result in a hung parliament left the pound at multi-week lows against the euro, US dollar and Canadian dollar.

The slide in GBP/USD was also the result of positively revised US growth data as the report boosted hopes that the Federal Reserve will increase interest rates in June.

Sterling was able to recoup some losses against the euro however amid concerns that the Greek bailout negotiations could come to a grinding halt. Greek Finance Minister Euclid Tsakalotos issued a warning to the nation’s creditors – Greece would not move on to the next stage of bailout discussions without the IMF and EU agreeing to debt relief.

What’s coming up?

Political developments will continue dominating headlines (and dictating pound movement) for much of this week with the election now just over a week away.

There are no UK reports set for release today, but GBP/EUR fluctuations could follow the publication of the Eurozone’s economic/industrial/services and consumer confidence figures and German inflation stats for May.

Upbeat releases could see the pound return to its weakest levels against the euro.

Meanwhile, the US will be publishing personal consumption and consumer confidence numbers.

As long as the data supports the case in favour of the Federal Reserve increasing interest rates next month, the GBP/USD exchange rate is likely to remain trading in the region of a one-month low.

We’re here to talk currency whenever you need us, so get in touch if you want to know more about the latest news or how it could impact your currency transfers.

Phil McHugh,
Trading Floor Manager

Phil provides dealing and hedging services whilst also helping to manage Currencies Direct overall market exposure.