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Euro Weakened as Merkel Majority Shrinks in German Election


GBP/USD 1 Week Chart

After plummeting at the end of last week’s session following Theresa May’s latest speech on Brexit, the Pound (GBP) began to claw its way higher again this morning as global political uncertainty drove investors back to GBP.

Meanwhile Investors are also likely to be focused on the Bank of England’s consumer credit report later this morning, with the bank possibly warning of the risks of rising credit amongst UK consumers.


The Pound Euro (GBP EUR) exchange rate has jumped by nearly a cent this morning, recouping much of its losses from the end of last week following the German election on Sunday.

While markets were relieved to see that Angela Merkel has won a fourth term in office, investors are concerned as she lost a number of seats to the far right AfD party, with the SDP ending its ‘grand coalition’ with Merkel’s conservative CDU/CSU party after it suffered disastrous losses.

Merkel now faces the task of creating a new coalition government with the Greens and the Free Democrats (FDP); a precarious alliance that is unlikely to inspire confidence in markets.

US Dollar

Sterling has also rebounded against the US Dollar (USD) this morning as markets flocked to the UK currency as Trump continued his war of words with Pyongyang.

Markets are becoming increasingly nervous about the situation between the two countries as the escalating rhetoric has seen the respective leaders of each nation threaten to destroy the other.

Meanwhile USD investors are likely to be focused on a number of speeches by Federal Reserve policymakers later today, with any hint that they support another rate hike later this year likely to propel the US Dollar higher.

Canadian Dollar

The Pound Canadian Dollar (GBP CAD) exchange rate has also rallied at the start of this week’s session, although Sterling’s advance was slowed somewhat by resilient oil prices, with crude holding onto most of last week’s gains as OPEC suggested their production cuts are beginning to have an impact on global stock levels.

Australian Dollar

Sterling climbed by around half a cent against the Australian Dollar (AUD) this morning, with the ‘Aussie’ in retreat as commodity prices dipped last week, particularly iron ore, which ended Friday’s session down nearly 4%.

New Zealand Dollar

The Pound New Zealand Dollar (GBP NZD) exchange rate raced higher this morning as investors shied away from the ‘Kiwi’ following Saturday’s general election, which resulted in a hung parliament.

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