GBP/EUR Holds Steady as German GDP Comes in Below Expectations
The Pound Euro (GBP/EUR) exchange rate is trending narrowly this morning despite German GDP striking a six-year high in 2017.
At the time of writing the GBP/EUR exchange rate is largely unmoved from this morning’s starting levels.
Euro (EUR) Gains Subdued Following German GDP Data
While the Euro has made a tentative push higher this morning following Germany’s GDP data the single currency’s gains appear to have been trimmed as the figures came in slightly below expectations.
According to figures released by Germany’s Federal Statistics Office, Destatis, domestic GDP climbed from 1.9% to 2.2% in 2017, Germany’s strongest pace of growth in six years.
However this was below initial forecasts of 2.4% growth, slightly denting the Euro’s gains in the wake of the data.
Despite this small setback the figures are still a marked improvement from initial forecasts at the start of the year, where economic and political uncertainty lead to predictions of just 1.5% growth.
The data also highlights just how well Germany’s and the great Eurozone economy has fared over the last twelve months and some analysts forecast that the final reading could prove to be even more robust.
Carsten Brzeski, Chief Economist at ING Germany said;
‘Today’s GDP data mark the end of a remarkable year for the German economy. A year ago, consensus forecasts for German growth were around 1.5% for 2017. Now, GDP growth is likely to come in at around 2.5%. How could the German (and the Eurozone) economy surprise so positively?’
Pound (GBP) Weakened by Brexit Study
Sterling sentiment meanwhile was dented this morning by the release of a study looking into the impact of a ‘no deal’ Brexit on the UK economy.
The study, which was commissioned by London Mayor Sadiq Khan suggests that the failure to reach a Brexit deal with the EU could cost the UK economy around half a million jobs and up to £50bn worst of investment by 2030.
The report broke down the outcomes of five different Brexit scenarios, revealing that the harder the Brexit the greater the negative impact on the UK economy.
Khan told BBC Radio 4’s Today show this morning;
‘It’s crucial the government understands the consequences of each scenario they’re considering with the EU. I want them to choose the best outcome for jobs, for investment and for economic output.’
The study comes hot on the heels of a report published by recruitment firm Morgan McKinley which showed that job openings in London’s finance industry plummeted 52% in December, in what is being attributed to possible plans to relocate staff post-Brexit.
GBP/EUR Forecast: Investors Await Outcome of Berlin Brexit Trip
Looking ahead markets will be closely watching to see what impact Chancellor Philip Hammond’s and Brexit Secretary David Davis’ trip to Berlin had on Brexit.
The pair visited Berlin on Tuesday as part of a charm offensive to persuade German businesses to support a ‘bespoke’ Brexit deal for the UK, with the aim of retaining the UK’s access to the European financial system.
In the meantime the GBP/EUR exchange rate may be prompted to move on Friday by the release of France’s final CPI figures for December, with economists forecasting they will confirm that inflation climbed from 0.1% to 0.3% at the end of last year.