UK Construction Activity Fell Further-than-Expected in November
The UK construction industry is the latest sector to disappoint investors and economists. Month-on-month (MoM) Construction Output fell -0.5% in November, flouting predictions of an acceleration from 0.2% to 0.5%, while year-on-year (YoY) output dropped -1.1%, -1% more than anticipated. The figures come without the ‘National Statistics’ seal of quality, however, as officials from the Office for National Statistics (ONS) have had difficulty separating output changes and price changes. The figures will still have a negative impact upon this month’s 2015 Q4 growth figures.
Could Rising Consumer Credit Threaten the UK Economy?
While Bank of England (BoE) Governor Mark Carney has dismissed concerns over the levels of UK consumer credit, today’s lending figures are unlikely to sees those fears abated. The BoE’s Credit Conditions Survey has shown a rise in mortgages, personal loans and in particular Buy-to-Let (BTL) mortgages, as lender risk appetite is on the rise and credit scoring criteria becomes more relaxed.
The Euro (EUR) has turned bullish this morning, making strong gains against many of the major currencies, driven partly by an emerging attitude among European Central Bank (ECB) policymakers that more stimulus is unnecessary. Meanwhile, Pound Sterling (GBP) is remaining mostly negative, perhaps as investors come to terms with the likelihood that an interest rate hike by the Bank of England (BoE) could still be a long way off.
Pound Sterling Facing Strong Headwinds in 2016: GBP/EUR Remains Weak
The bad news for the Pound just keeps coming, as predictions for the currency’s performance over the coming year become increasingly bleak. One of the key factors cooling trader appetite is the low prospect of an interest rate hike any time in the near future. The Bank of England (BoE) once again left interest rates on hold at their record lows during yesterday’s meeting of the Monetary Policy Committee (MPC). The decision marks the 82nd month of no change and, thanks to worsening global conditions, many are predicting it could get to 94 months, February 2017, before a rate hike is finally delivered.
The potential for a ‘Brexit’ and the uncertainty surrounding the fallout from a ‘Yes’ vote, are further contributing to Pound weakness. The chairs of both BT Group PLC and Barclays PLC have become the latest UK business leaders to issue warnings against leaving the EU, claiming that the country’s ‘Brexit’ debate has already had a negative effect on the amount of foreign investment entering the UK.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trading around 1.3160.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Charges Ahead as Policymakers Hint Loosening Could be Over
The Euro is defying current market conditions to post a bullish rise against many of the major currencies. Inflation data from Spain has painted a mixed picture, with the country still suffering from deflation, although the data shows conditions are improving. The French budget deficit increased from -€76.2 billion to -€82.8, although this was smaller than the -€92.9 billion forecast.
The common currency has made advances of 0.9% against Pound Sterling, 1.7% against the Canadian Dollar (CAD) and New Zealand Dollar (NZD) and 2.2% against the Australian Dollar (AUD). The rise could in part be due to an exclusive report by Reuters, which cites conversations with five ECB policymakers who are reluctant to loosen monetary policy any further. The policymakers would prefer to ignore the temporary effects of China and oil on the markets in order to keep interest rates on hold. However, the markets have priced a 50% chance that the deposit rate will be cut further in March, while one cut by the end of the year has already been fully priced in.
The EUR/GBP exchange rate is currently trading between 0.7525 and 0.7606.
Pound Sterling to Euro Exchange Rate Forecast: Consumer Price Indexes Due on Tuesday
The remainder of today will be quiet in terms of data and the only relevant releases on Monday are the UK housing price figures, which could harm GBP if they show that property value has significantly increased. Forecasts of German Consumer Price Index figures on Tuesday are followed by actual CPI data for the UK, which will likely spark volatile trading.
The GBP/EUR exchange rate is currently trading between 1.3137 and 1.3285.