Euro Pound Sterling (EUR/GBP) Exchange Rate Muted as Debate Declared ‘Dead Heat’
The Euro Pound Sterling (EUR/GBP) exchange rate was left muted on Wednesday, with the pairing trading at around £0.8573.
Overnight, Sterling remained under pressure after Tuesday’s inconclusive election debate between Prime Minister Boris Johnson and Labour leader Jeremy Corbyn.
While Johnson leads in the polls, a snap poll from YouGov released after the election debate showed that 51% felt he performed best.
However, 49% believed Jeremy Corbyn was stronger, and Political Research Manager at YouGov, Chris Curtis said:
‘On balance this is probably better for the Labour leader, why? Because a dead heat when you are significantly behind in the polls is probably better news for you that the person who is leading.
‘It doesn’t seem from these initial numbers to be a game changing moment.’
The UK election debate was not seen as a game changer, leaving the pairing flat.
Commenting on this, Rabobank currency strategist, Piotr Matys said:
‘The debate was not a game changer for Sterling.
‘The market reaction would have been stronger if Jeremy Corbyn had gained an advantage in the polls but that doesn’t appear to have been the case.’
German Producer Prices Suffer Steepest Decline in Three Years
On Wednesday morning, data revealed that the German Producer Price Index (PPI) slumped by -0.2% between September and October.
Added to this, producer prices slumped by -0.6% compared to October 2018.
This was the second annual decline in inflation in the bloc’s largest economy, which marked the steepest decline in PPI since September 2016.
ECB: Eurozone Will Not Fall into a Recession
On Tuesday, European Central Bank’s (ECB) chief economist, Philip Lane said the bloc’s economy will not fall into a recession.
He noted that while the Eurozone economy is growing less than forecast, there will be a recovery.
Speaking to Italian daily la Repubblica, Lane stated:
‘The economy is growing less quickly than what we hoped. The dynamic is disappointing but not negative. We expect a recovery in the next year or two.’
He also discussed inflation, and noted that the bloc’s current inflation rate of 1% is ‘unsatisfactory’.
He also added that the countries within the bloc should now take advantage of the current low interest rates and reduce their debt piles instead of wasting ‘the additional resources for new expenses or cuts to taxes’.
Euro Pound Outlook: Will Strong Eurozone Consumer Confidence Buoy EUR?
Looking ahead to Thursday, the Euro (EUR) is likely to edge up against the Pound (GBP) following the release of the Eurozone’s flash consumer confidence.
If confidence rises higher than expected in November, it will provide the single currency with an upswing of support.
Meanwhile, Sterling is likely to remain under pressure as the UK gets closer to the 12th December general election.
However, if reports reveal the Conservative Party continue to lead in the polls, and are gaining further support, the Euro Pound (EUR/GBP) exchange rate will be left flat.