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Euro Pound (EUR/GBP) Exchange Rate Steady, German Consumer Confidence Dips for January

EUR/GBP Exchange Rate Rangebound on Gloomy German Consumer Morale

The Euro Pound (EUR/GBP) exchange rate held steady today, with the pairing currently trading around £0.854 after the German GfK Consumer Confidence Survey figure for January eased unexpectedly from 9.7 to 9.6.

Rolf Buerkl, a researcher at GfK, commented:

‘News about job cuts in some industrial sectors, such as the car industry and automobile suppliers, are leading to less optimistic income expectations.’

However, with the German economy being the largest in the Eurozone, flagging consumer confidence has weighed on market confidence in the Euro today as the outlook for next year dims.

Today also saw the release of the French Consumer Spending figure for November, which fell from 0.2% to 0.1%, further instilling concerns for the bloc’s economic health.

Meanwhile, Euro traders are keeping an eye on US-China trade developments as markets begin to price in a de-escalation of the trade war.

Any signs of a consensus emerging between the two largest economies could boost optimism for Germany’s economic recovery in the near term as trade risks ease off.

GBP/EUR Exchange Rate Steady, Brexit Withdrawal Agreement Bill Vote in Focus

The Pound (GBP) was flat against the Euro (EUR) this morning following the release of December’s UK GfK Consumer Confidence, which beat forecasts and rose from -14 to -11 due to anticipation ahead of the general election.

Hann-Ju Ho, Senior Economists at Lloyds Bank, commented:

‘There is now clarity over the UK’s departure from the EU, but the focus will turn to whether a new trade agreement can be negotiated during the transition period which currently runs until the end of next year.’

Brexit developments remain in focus today, however, with Parliament due to vote on the EU Withdrawal Agreement Bill later on today.

However, as Prime Minister Boris Johnson has now inserted a ban on a Brexit extension period beyond the end of 2020, this has left British markets feeling jittery on the prospect of a cliff-edge no-deal Brexit next year.

We could see the GBP/EUR exchange rate ease once the bill is passed, with markets becoming increasingly concerned over rising Brexit uncertainty going into the New Year.

GBP/EUR Outlook: Brexit Developments to Drive Pound Before Christmas

Looking ahead to next week, the European and UK data calendars are looking sparse over the Christmas period with political and global economic developments likely to continue to drive the Euro.

Any signs of improving US-China trade relations before the New Year could buoy the EUR/GBP exchange rate on increasing hopes of some recovery for the Eurozone’s trade-reliant economy.

Meanwhile, Brexit developments will continue to drive the GBP/EUR exchange rate, with any further indications of a possible no-deal Brexit next year proving Pound-negative.