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Pound Euro (GBP/EUR) Exchange Rate Steady, UK Consumer Confidence at Six-Year Low

GBP/EUR Exchange Rate Holds Steady as UK Markets Brace for Election Debate

The Pound Euro (GBP/EUR) exchange rate held steady this morning, with the pairing currently trading around €1.172 after the UK GfK consumer confidence figure for November flatlined at -14, its lowest level in six years.

Sterling investors are remaining cautious today, for with British consumer confidence remaining so low ahead of Christmas, concerns over the UK’s economic growth in the near-term are beginning to haunt UK markets.

Joe Staton, Client Strategy Director at GfK, was downbeat in his analysis, saying:

‘In the face of Brexit and election uncertainty, consumers are clearly in a ‘wait and see’ mode. The General Election is potentially an opportunity to move us out of the doldrums, but for this to happen there must be a clear result. A hung parliament could be very damaging for consumer confidence and would surely deepen the obvious malaise that we see month after month.’

The GBP/EUR exchange rate has continued to remain rangebound despite yesterday’s influential YouGov poll indication a Conservative majority for the 12th December general election.

UK political developments continue to drive the Pound, with markets bracing for tonight’s BBC Election Debate which is expected to include ‘leaders and senior figures’.

EUR/GBP Exchange Rate Rangebound, Could Rising Eurozone Inflation Boost the Euro?

The Euro (EUR) struggled to gain against the Pound (GBP) today after this morning’s publication of October’s German retail sales figure, which plummeted below forecasts from 0% to 1.9%.

Carsten Brzeski, Chief Economist for ING, Germany, commented:

‘Even though today’s retail sales were a bad start to the final quarter of the year, private consumption should continue supporting German growth in the near term. In the longer run, however, it is questionable how sustainable any upcoming spending sprees might be. We expect more discussions about the sense and nonsense of consumption-driven economic growth.’

Meanwhile, Germany’s unemployment change figure for November beat forecasts, sinking from 5,000 to -16,000 on the month, while the unemployment rate held steady at 5%.

The EUR/GBP exchange rate has held steady, however, with markets bracing for today’s publication of the Eurozone’s flash core inflation for November, which is expected to improve at 1.2%.

Analysts at ABN AMRO commented:

‘Indeed, core inflation, which has remained stuck at a level close to 1% since the end of 2016, is expected to continue to hover around the same level in the coming months.’

GBP/EUR Outlook: UK Manufacturing PMI in Focus

Euro (EUR) investors will be looking ahead to Monday’s release of November’s German Markit Manufacturing PMI, which is expected to hold at 43.8. However, any downward revision would prove EUR-negative.

GBP traders, meanwhile, will be awaiting Monday’s release of November’s UK Markit Manufacturing PMI, which is expected to remain firmly mired in contraction territory at 48.1.

UK political developments will remain the primary driver of the GBP/EUR exchange rate next week, with any further signs of the Conservatives consolidating their lead positon likely to boost the Pound.