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Pound Euro Exchange Rate Trends Near December Lows on Consumer Confidence Stats

  • Pound Euro Exchange Rate Slips to 1.12 – Pound unable to hold its ground
  • UK Consumer Confidence Disappoints – Eurozone consumer confidence impresses
  • GBP Forecast: UK Growth in Focus – Strong growth data could boost Pound trade
  • EUR Forecast: Spanish and German Inflation Next Week – Euro strength likely

The Pound Euro exchange rate took another slip on Wednesday night and spent Thursday’s session trending near its lows, as underwhelming UK data and strong Eurozone confidence stats made it easier for the Euro to hold its gains against the British currency.

GBP EUR began the week trending at around 1.1338 and has largely dropped since then due to Euro strength. On Thursday morning the pair hit a December low of 1.1249 and continued to trend near that level for most of the day.

Pound (GBP) Weak as UK Consumer Confidence Disappoints

Despite the latest UK public sector net borrowing results beating expectations slightly, the Pound Euro exchange rate continued to trend near its weekly lows on Thursday.

Britain’s November public sector net borrowing print came in at £-8.12b, a lighter deficit than the forecast £-8.3b. The previous figure was revised higher from £-7.46b to £-7.25b.

Analysts were mixed on the result. John Hawksworth from PwC acknowledged that the deficit was no longer at the dangerous levels seen following the financial crisis, but was concerned that progress could slow;

‘Further progress on reducing the budget deficit may be slow over the next couple of years as Brexit-related uncertainty drags on UK growth, which we expect to lag some way behind both the US and the Eurozone in 2018 and 2019.’

A gloomy outlook on Britain’s economy, as well as uncertainty about the second phase of Brexit negotiations, is weighing on the Pound.

The latest UK consumer confidence report from GfK indicated that UK consumers were feeling quite gloomy too. The figure was forecast to remain at -12, but unexpectedly worsened to -13.

Euro (EUR) Supported by Impressive Confidence Stats

Investors were impressed in November by news that Eurozone consumer confidence had reached a positive print of 0.1, the report’s first positive print in over a decade.

While that figure was revised lower to 0.0 in Thursday’s Eurozone consumer confidence projection for December, the December prediction came in at an even more impressive 0.5.

On top of the impressive Eurozone confidence projection, The Netherlands’ December consumer confidence report improved from 23 to 25, while The Netherlands’ November unemployment rate improved from 4.5% to 4.4%.

These datasets helped investors to remain optimistic on the Eurozone’s 2018 economic outlook, which in turn helped to keep the Euro appealing.

Pound Euro Forecast: UK Growth Rate in Focus

The biggest UK data publication until the end of the year will be the final Q3 Gross Domestic Product (GDP) report, which is set to come in this morning.

If UK growth beats expectations, this could help GBP EUR to recover some of this week’s losses. UK business investment data could also support Pound trade if it impresses.

Some notable Eurozone data will be published too, including Q3 growth results from France as well as business and consumer confidence stats from Italy.

Overall, Sterling is likely to be weighed down by 2018 uncertainties while the Euro will be supported by hopes of Eurozone growth next year.

As market activity quiets down for the holiday season, the Pound Euro exchange rate is unlikely to see a notable shift in movement for the remainder of the year.