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Sterling Falls Against Euro To 7-Week Low Ahead of Scotland Election

Schedule euro to pound at intervals of 240 minutes

The pound fell against the euro on Friday to its lowest level in seven weeks, and suffered losses against the single currency for the second week in a row, with analysts attributing the drop in part to the upcoming elections to the Scottish parliament.

After a strong first quarter, fueled by rapid vaccinations against COVID-19 in the United Kingdom and lower expectations for negative interest rates, the beginning of April was weaker for the pound sterling.

While traders have watched for signs of how the UK store reopening will impact the economic recovery, they also said investors have become more cautious ahead of the May 6 parliamentary elections in Scotland.

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The Scottish National Party (SNP) is expected to do well again. She promised to hold a second referendum on independence from the United Kingdom if she won a majority in the Scottish parliament.

“Some attribute this decline to the fact that the positive news about vaccines in the UK is completely ignored, although we are still not convinced by this explanation alone. It is more likely that the pound sterling will be exposed to some political risk ahead of the elections in Scotland on May 6,” suggested Jeremy Stretch, head of the G10 currency strategy at CIBC Capital Markets.

ING analysts said that investors are reluctant to return to long positions in the pound sterling ahead of the elections, “which will be priced towards independence.”

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In early London trading, the pound fell to 87.18 pence against the euro, its lowest level since February 26. At 08:40 GMT, it fell 0.3% to 87.10p.

Compared to the dollar’s weakening, it traded unchanged at $ 1.3783 and was set for one-week gains after finishing its worst week of the year against the dollar last Friday.

All retail stores, hairdressers, gyms, and pubs reopened in England on Monday. In the coming weeks, Scotland, Northern Ireland, and Wales will reopen various spheres for their societies.

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