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Pound Euro (GBP/EUR) Exchange Rate Drops as Christmas Retail Figures Suffer

Pound Euro exchange rate forecast

GBP/EUR Exchange Rate Falls as Boris Johnson Heats Brexit Debate in Major Speech

The Pound Euro (GBP/EUR) exchange rate is down by 0.3% today and is currently trading around €1.1348 on the inter-bank market.

The Pound (GBP) is struggling against the (EUR) after the publication of UK retail sales figures – excluding fuel – plummeted by -1.3%.

With consumer spending generally expected to increase over the Christmas period, this has left many GBP investors feeling skittish, as concerns continue to mount over the state of the UK economy amidst ongoing Brexit uncertainty.

Jeremy Thomson-Cook, Chief Economist at WorldFirst, commented:

‘Everything from lower consumer confidence, Brexit fears, higher interest rates, currency fluctuations, slowing consumer credit take-up and business rates made 2018 a really tough year for retailers and 2019 could easily repeat such pain.’

Former UK Foreign Secretary Boris Johnson is due to make a major speech today in which he is expected to attempt to use Brexit as a means of easing divisions, and by focussing on the ‘issues that drove Brexit’, this, for many, has been interpreted as a leadership challenge to Theresa May.

Johnson will say:

‘[The Leave vote] was . . . triggered by a feeling that in some way the people of this country has been drifting too far apart and in areas where we need to come together.’

EUR/GBP Exchange Rate Rises despite Poor Portuguese PPI Figures

The Euro has managed to hold on to its gains against Sterling today despite the publication of the Eurozone’s seasonally-adjusted current account figures which showed a lower-than-expected surplus €20.3bn.

Euro investors were also unmoved by today’s release of Portugal’s PPI figures for December, which dropped -1.0%.

The EUR/GBP exchange rate has further gained today, despite the French Prime Minister Edouard Philippe raising fears over a Brexit no-deal and motioning a contingency plan which could cost above €50m to ports and airports if the UK leaves the EU in a chaotic manner.

Philippe commented:

‘In such a situation, the government’s responsibility is to make sure the country is ready, that the interests of our citizens are looked after. That’s why I’ve decided to trigger the plan for a no-deal Brexit.’

GBP/EUR Outlook: Brexit ‘Plan B’ Anticipation Builds

EUR investors will be looking ahead to Monday’s publication of the German PPI figures for December, with any signs of a decrease potentially clipping some of the Euro’s strength against Sterling next week.

Looking further ahead to Tuesday, GBP investors will be taking particular note of the average earnings figures for January, with any signs of an increase potentially bolstering the Pound.

Sterling investors, meanwhile, will also be awaiting Monday when Theresa May is due to present her Brexit ‘Plan B’ to Parliament, with any signs of increasing division over this withdrawal agreement potentially throwing the GBP/EUR into further volatility.