German Industrial Production Slows, Euro (EUR) Dips
The Euro has fallen today after data showed that German Industrial Production barely registered any annual growth in November. A surprise -0.3% fall in month-on-month (MoM) growth saw the Year-on-Year (YoY) seasonally adjusted rate of growth fall from 0.4% to 0.1%, instead of rising to 0.5% as predicted.
Legendary Investor Soros Predicts Return to 2008 Conditions on Back of China Fears
The renowned investor George Soros, who pocketed £1 billion after ‘breaking’ the Pound on ‘Black Wednesday’, has drawn parallels between the current problems in China and the 2008 financial crisis. While The Economist doesn’t agree, it does suggest that the economic conditions of 1998, when Asian countries devalued their currencies after using speculation to drive growth, could be seen again.
Chinese Turmoil Causes Further Stock Market Panic
The worsening conditions in China has fuelled a further rout of the stock market, with £40 billion wiped from the FTSE100 in response to the news that the Chinese stock market had to be closed early again. Chinese authorities later decided to suspend their new ‘circuit breaker’ mechanism, which was designed to temporarily halt trading in order to control volatility. The People’s Bank of China (PBoC) have also curbed their efforts to devalue the Yuan. Both Pound Sterling and the Euro are likely to feel the weakening effect of building trader concern as China tops the list of concerns affecting the global economy.
The Euro is making strong gains against the major currencies today, buoyed by overseas weakness, a cautious US Federal Reserve and a surprise drop in the unemployment rate. Meanwhile, Pound Sterling has been pushed further down by comments from George Osborne, who warns of a ‘dangerous cocktail’ of threats against the UK economy in the coming year.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Soars Despite Mixed Data Releases
The Euro is currently making bullish advances against many of the major currencies, gaining 0.6% against the US Dollar (USD) and the New Zealand Dollar (NZD), 0.9% against the Canadian Dollar (CAD), 1.0% against Pound Sterling and 1.2% against the Australian Dollar (AUD).
Recently released data has shown that Eurozone unemployment unexpectedly fell in November, dropping from 10.7% to 10.5%. Germany’s retail and construction sectors both grew, as did the Italian retail sector, while Eurozone Economic Confidence and Services Confidence both edged up in December. The figures weren’t entirely positive, however, as the month-on-month (MoM) Eurozone retail sales decline accelerated to -0.3% with year-on-year (YoY) growth slowing from 2.5% to 1.4%.
The EUR/GBP exchange rate is currently trending in the region of 0.7443.
George Osborne Warns of Threats to UK Economy in 2016: GBP/EUR Falls
Pound Sterling is trending negatively against most of the major currencies following the news that George Osborne will warn against ‘complacency’ when it comes to securing the future of the UK economy. In the text from a speech to be given in Cardiff, Mr Osborne has emphasised the need to continue with austerity measures and, in a thinly-veiled attack on the Labour party, warned that politicians could reverse progress by continuing to call for ‘billions of pounds more debt-fuelled public spending.’
The Chancellor has highlighted economic problems in China, Russia and Brazil, political tensions in the Middle East and a continuing fall in commodity prices, in particular crude oil as threats facing the UK economy.
According to the Chancellor, ‘the British economy has performed better than almost anyone dared to hope. And as an issue, the economy has slipped down the list of many people’s everyday concerns. But the biggest risk is that people think that it’s ‘job done’.’
Mr Osborne’s economic policies have been criticised recently as the UK continues to suffer from flooding and other damage related to the recent storms. Despite multiple studies and reports warning that spending on flood defences needed to increase, George Osborne cut the budget for flood and coastal erosion defences by 15% after coming to office in 2010.
The GBP/EUR exchange rate is currently trading between 1.3396 and 1.3580.
EUR/GBP Exchange Rate Forecast: Trade Balance Data in Focus
Pound Sterling will likely continue to feel the weakness from George Osborne’s comments in the near future. Tomorrow sees the release of Trade Balance figures for both the UK and Germany, with the UK deficit predicted to shrink and Germany’s €22.3 billion surplus forecast to drop to €20.2 billion.
The EUR/GBP exchange rate is currently trending between 0.7361 and 0.7460.