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The euro's fate rested on Michel Barnier on a dramatic Wednesday. Editorial credit: Antonin Albert, via Shutterstock.
Michel Barnier’s brief tenure as French prime minster is over after parliament passed a vote of no confidence in his leadership. After a dramatic night of voting that would prompt Barnier to offer his resignation, the euro opened Thursday’s session down against is main rivals as the prospect of political instability pushed investors towards safe-haven currencies. GBP/EUR this morning hovered close to its highest level since early 2022.
Yesterday was a solid day all round for the pound, which climbed by around 0.3% against both the euro and the US dollar. EUR/USD managed to record a marginal gain ahead of a major speech given by Federal Reserve chair Jerome Powell.
Bank of England governor Andrew Bailey said that he expected four cuts to interest rates in 2025. Welcoming recent falls to inflation, Bailey said that consumer prices had fallen faster than policymakers expected, although he continued to stress the Bank would analyse the data and follow a cautious approach. “We’ve been looking at a number of potential paths ahead — and some of them are better than others”, he added.
The South Korean Won rallied on Wednesday after an extraordinary dabble with martial law this week. With the threat of authoritarianism seemingly extinguished, the South Korean Won climbed by almost 2% against the pound and the US dollar after plunging by 3% on Monday night. South Korean politicians are now trying to impeach President Yoon Suk Yeol for his role in the affair.
Big change could be afoot for British motorists and holidaymakers. According to Auto Trader, petrol cars on the road may have peaked this year with the number of electric and hybrid vehicles forecast to soar by 40% in the next decade.
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GBP: Smoother sailing
The pound enjoyed a strong outing on Wednesday as the euro watched from behind its fingers and the US dollar was muted ahead of Jerome Powell’s speech. GBP/EUR has notched several days of consistent rises and the pound is also up on the US dollar since Monday morning.
GBP/USD: the past year
EUR: The ripple effect of politics
Political drama in Paris dominated airwaves on Wednesday, serving to disguise some of the more significant impacts of the budget meltdown. For one thing, many French people will now be forced to pay more tax due to the inability to adjust for inflation. Secondly, the euro could now see significant depreciation, particularly as Germany grapples with its own troubles.
GBP/EUR: the past year
USD: Powell hails economic recovery
According to Fed chair Jerome Powell, the US economy now looks stronger than it did back in September when interest rates were first cut. Powell was clear in saying that subsequent rate cuts would have to come slowly and thoughtfully, which provided a boost for the US dollar.
EUR/USD: the past year
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