Pound to euro exchange rate: Sterling has fallen following Boris Johnson’s resignation
The pound has dramatically dropped against the euro following a government upheaval.
According to Bloomberg, the pound is currently trading against the euro at £1.127, a fall from yesterday’s figure of £1.130.
It follows the announcement that key government figures David Davis and Boris Johnson have resigned.
Laura Parsons, currency analyst, explained how this had affected the UK exchange rate.
She told Express.co.uk: “The pound was pressured lower yesterday as the government experienced yet more upheaval, with Boris Johnson resigning as Foreign Secretary.
The prime minister has warned MPs that a divided government could result in a Jeremy Corbyn takeover
“Johnson’s resignation came hot on the heels of Brexit Secretary David Davis resigning his position, and concerns that Prime Minister Theresa May could face of vote of no confidence saw Sterling slide against all the majors, with GBP/EUR hitting lows of €1.126.”
Theresa May has since appointed Jeremy Hunt as the new foreign secretary, who was previously health secretary.
She spoke to critics amid rumours that a vote of no-confidence was on the cards, as signatures needed to spark a leadership election grew close to 48.
The prime minister has warned MPs that a divided government could result in a Jeremy Corbyn takeover.
In Johnson’s resignation letter, he accused the government that the Brexit “dream is dying”.
Pound to euro exchange rate: Sterling has fallen to £1.127 following the government upheaval
Ms Parsons also explained how the pound could be affected later this week.
She said: “Further political turmoil would have a negative impact on the pound, but the GBP/EUR exchange rate could also fluctuate in response to UK trade, manufacturing/industrial production, and GDP data.
“Positive reports would support the case in favour of the Bank of England (BoE) increasing interest rates in August and could help the pound recoup its recent losses.
“GBP/EUR could also creep higher if the German and Eurozone ZEW economic sentiment surveys show a decline in confidence.”
The Bank of England could raise interest rates by next month is the economy continues to improve.
Pound to euro exchange rate: Boris Johnson and David Davis both resigned from yesterday
However, the political instability has threatened the strength of the pound and could delay this.
UK interest rates currently stand at 0.5 per cent having been increased from 0.25 per cent in November 2017 for the first time in a decade.
The increase could see the interest rates increased to 0.75 per cent on August 2.
The Institute for Public Policy Research (IPPR) has also advised the BoE to freeze house price rises for the next five years.
It could help first time buyers as house prices could fall as much as ten per cent while wages rose, making homes affordable.