Limited UK news has failed to prevent a small Pound to Euro rise today; the GBP/EUR pairing has risen before the reveal of a key government plan for industry.
- GBP EUR rate rises to 1.1186 – EUR GBP pairing trades down at 0.8939
- UK industrial plans support Sterling – Major investments apparently on the way
- Italian confidence slowdown drags on Euro – Concerns voiced about pre-Christmas confidence drop
- All eyes on major BoE stability report – Euro may recover if German confidence rises
A quiet start to the week has seen the Euro lose ground, following news of declining Italian consumer scores.
Pound Gains Ground ahead of UK Industrial Strategy Reveal
In the hours before the UK industrial strategy is revealed, the Pound has made a cautious advance against the Euro.
The strategy is apparently aimed at revitalising the UK economy and putting it in good shape, before the possible turbulence associated with leaving the EU.
While the government isn’t expected to go spend-crazy, the strategy seemingly contains plans to invest in partnerships with private companies in key sectors.
The Conservative Party remains outwardly committed to austerity, but these plans at least suggest that tactical spending is not outside of the government’s remit.
Italian Confidence Dip Worsens EUR/GBP Trading
A small drop in Italian confidence has been all that was needed to weaken the Euro today.
The single currency has slipped because of Italian confidence readings for November, which have shown lower consumer and business confidence.
The actual declines weren’t major, showing a move from 116 points to 114.3 for consumer confidence and a fractional decline from 110.9 to 110.8 for business confidence.
Commenting on the results, Massimiliano Dona of the National Consumer Association said;
‘It’s bad news ahead of Christmas.
The worsening views of household budgets and of intentions for durable good purchases don’t lead [to optimism about] the shopping season’.
Incoming BoE Reports could Inspire Pound to Euro Volatility
The week will properly begin for the UK on Tuesday, when a Bank of England (BoE) financial stability report will be released.
This takes a look at the current state of the UK economy and provide an outlook on future national economic stability.
If the report shows BoE caution about difficult conditions due to Brexit impacts, the Pound could slide against the Euro.
In the same vein, Sterling could also be shifted by Wednesday’s BoE consumer credit report.
This measures how much UK citizens are borrowing; a sharply rising figure could spark fears about a future debt crisis and devalue the Pound.
Higher debt has concerned BoE policymakers in recent months; this has only been made worse by forecasts for a prolonged UK wage squeeze.
Euro traders are also primed for high-impact data on Tuesday; this will be the GfK consumer confidence reading for Germany.
Covering expectations of the German economy in December, this reading is expected to show a rise from 10.7 points to 10.8.
While an extremely minimal points increase, this could still inspire higher confidence in the Euro and lead to a EUR/GBP advance.
Higher confidence is good news regardless, but would be especially positive in this case as the German government is currently in a state of flux.
Current Interbank GBP EUR Exchange Rates
At the time of writing, the Pound to Euro (GBP EUR) exchange rate was trading at 1.1186 and the Euro to Pound (EUR GBP) exchange rate was trading at 0.8937.