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EUR/GBP fell modestly to around 0.8475 in early European trading on Friday. The British pound (GBP) rose as Keir Starmer’s Labour Party appeared set to win a large majority in the 2024 UK general election, Reuters reported on Friday. Later in the day, the eurozone will release retail sales data for May.
The opposition Labour Party in the UK won 337 seats in the parliamentary election, meaning it now has a majority in the 650-seat House of Commons, Reuters reported on Friday, citing broadcaster ITV. Derek Halpenny, head of foreign exchange research at MUFG, believes that a Labour victory could be good for the British pound (GBP). A Labour majority would provide it with a strong mandate to govern and potentially bring greater political stability.
However, expectations that the Bank of England (BOE) will cut interest rates starting with its August meeting could drag the pound lower.
On the euro side, data released by Germany’s federal statistics office Destatis on Friday showed that German industrial production in May was lower than market expectations. The month-on-month decline in May was 2.5%, compared with a 0.1% decline in the previous month. German industrial production fell 6.7% year-on-year in May.
The euro (EUR) fell slightly due to weak German factory output. Traders will take more cues from euro zone retail sales data for May, which is expected to show a year-on-year increase of 0.1%.
