GBP EUR higher as UK PM resigns
The Pound Euro (GBP/EUR) exchange rate rose to a six-week high today as reduced political instability in the UK cheered investors.
Prime Minister Boris Johnson has resigned as leader of the Conservative Party following months of uncertainty and scandals. Normally a change in leadership would dent the Pound (GBP). However, investors believe Johnson’s resignation will actually usher in a period of greater stability, as his premiership has been in doubt since the ‘Partygate’ revelations last year.
Meanwhile, energy security fears in the Eurozone are pressuring the Euro (EUR). Europe is reliant on Russian gas, but Moscow has slashed supplies in recent weeks in retaliation for Western sanctions. Analysts fear that surging energy prices and gas shortages could plunge the Eurozone into a recession.
Yesterday, European Commission (EC) President Ursula von der Leyen warned that Russia could completely cut off gas exports to Europe. Speaking to the European Parliament, the EC chief said:
‘We also need to prepare now for further disruption of gas supply and even a complete cut-off of Russian gas supply.’
These concerns have put significant pressure on the Euro in recent weeks. Unless there is some good news soon, the single currency may remain subdued.
Currently, the Pound Euro exchange rate is trading at €1.17885, around 0.8% up from today’s opening level.
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