UK Economic Growth Worse Than Previous Quarter, Consumer Confidence Also Down
UK Consumer Confidence fell to 1 point, down from a high of 6 earlier this year, while Gross Domestic Product remained level at 2.3%. Quarterly growth of 0.5% is an improvement upon the Q1 rate, but represents a drop on Q2’s 0.7% increase. German Retail Sales figures will now be released on Sunday, with movement in the GBP/EUR exchange rate coming almost entirely from UK data.
The EUR/GBP exchange rate is currently trending 0.2% up at around 0.7036.
The Euro (EUR) is faring better-than-expected today considering the week’s developments in Greece and new warnings from the European Central Bank (ECB) on the risks that emerging markets pose to the Eurozone.
Pound Sterling (GBP) had previously rallied after George Osbourne gave a surprisingly positive Autumn Statement, although the British asset has fallen again today as investors pick through the fine details and digest their implications.
EUR/GBP Exchange Rate Forecast: Euro Shrugs Off Overwhelming Bad News Ahead of German Consumer Confidence Survey
The current Euro uptick against Pound Sterling could be partly due to investors pausing before the imminent release of the German GfK Consumer Confidence Survey. The results are expected to show a decline in consumer confidence, although most Eurozone data this week has surprised with the rate of increase, so traders could be hoping to see a positive result.
After several weeks of turbulence, Germany has delivered some good news for Greece, handing Athens a list containing the names of more than 10,000 citizens suspected to be dodging taxes by using Swiss bank accounts. Prime Minister Alexis Tsipras has previously highlighted ending tax avoidance as a major policy commitment to help cover funding gaps left by the country’s anti-austerity programme. The inventory of unpaid tax being held in Swiss bank accounts is estimated to be €3.6 billion – nearly double the amount of Greece’s most recent tranche of bailout funds.
100,000 German citizens were spooked into admitting that they had evaded tax since it was announced that data had been bought from a whistle-blower, allowing the German state of North Rhine-Westphalia to reclaim over €600 million in penalties and fines.
The encrypted data was taken from HSBC by whistle-blower Hervé Falciani, a former IT worker. Several governments have since been able to use the data to reclaim unpaid tax from their citizens. Falciani was tried in his absence after refusing to leave France to attend a Swiss court. He was charged with economic espionage and has been sentenced to five years in prison.
The EUR/GBP exchange rate is currently up 0.2% and trading around 0.7040.
GBP/EUR Exchange Rate Forecast: Pound Sterling Slides as Investors Digest Autumn Statement
On the face of it, George Osbourne’s Autumn Statement was more upbeat than expected. He announced that the police and NHS budgets would be protected and revealed and that the Office for Budget Responsibility (OBR) had revised its growth forecasts for 2016 and 2017 up. However, among the ‘white rabbits’ pulled from the hat was the news that tax receipts had been weaker than expected thanks to poor rates of wage growth.
One of the biggest takeaways was that there will be another five years of cuts ahead if the Chancellor intends to meet his target of a 2019 budget surplus, meaning the UK will have experienced a decade of austerity.
The Institute for Government (IFG) thinktank said before the spending review that: ‘The reductions will take government spending relative to the size of the economy to levels that, in recent times, are below average but not unprecedented. However, the sustained period of cuts – a decade – will be unprecedented.’
The GBP/EUR exchange rate is currently trading between 1.4184 and 1.4248.
EUR/GBP Exchange Rate Forecast: UK GDP and German Retail Sales Could Spark Volatility on Friday
There is currently no prediction for the performance of German Retail Sales, which stood at 3.4% Year-on-Year (YoY) in September, while UK Gross Domestic Product due out the same day is expected to show a flat 2.3% rate of growth. However, with the OBR having revised their growth figures upwards for the next two years there is the potential that GDP figures will surprise, which could see Pound Sterling appreciate.
The EUR/GBP exchange rate is currently trading between 0.7016 and 0.7044.