EUR/GBP Exchange Rate Weakened by Soft German Consumer Confidence
The Euro to Pound (EUR/GBP) exchange rate is trending lower this morning as markets react to Germany’s latest consumer confidence reading.
At the time of writing the EUR/GBP exchange rate is down by roughly 0.3% this morning, with the pairing having shed most of Tuesday’s gains.
Euro (EUR) Exchange Rate Dips amid Gloomy Outlook from German Consumers
The Euro (EUR) is on the back foot against the Pound (GBP) and the majority of its other peers this morning as markets digest Germany’s latest consumer confidence index.
According to data published by market research firm GfK, the monthly barometer of sentiment is set to slip from 10.6 to 10.4 in December as consumers becoming increasingly concerned by a current soft patch in Germany’s economy.
Households also appear increasingly concerned by global trade tensions as well as remaining wary of the prospect of a no-deal Brexit, despite EU leaders approving a deal over the weekend.
However the most pressing concern for consumers appears to be due to be sagging incomes after inflation in the Eurozone picked up in the second half of 2018.
Pound (GBP) Exchange Rates Steady as Markets Await BoE Brexit Report
Meanwhile the Pound (GBP) is holding steady this morning as markets await the Bank of England’s (BoE) analysis of Theresa May’s Brexit deal.
The BoE’s report, which comes out later this afternoon, will compare the deal against a disruptive exit from the EU, with the bank expected to outline the risks posed by a no-deal scenario.
Whatever the figures show, they will no doubt be dismissed by those whose case they do not support! #UK #government, #BankofEngland to spell out no-deal #Brexit risks for #economy https://t.co/9PVp1rqicO
— Howard Archer (@HowardArcherUK) November 28, 2018
Jens Peter Sørensen, Chief Analyst at Danske Bank, suggests the ‘report is likely to be pivotal for GBP appetite’ today as the bank delivers its formal assessment of the Brexit deal.
Speaking in front of the Treasury Select Committee last week, BoE Governor Mark Carney said he would ‘expect’ the deal to ‘support economic outcomes’.
The Brexit report is expected to overshadow the BoE’s accompanying Financial Stability Review, also being released this afternoon.
EUR/GBP Exchange Rate Forecast: Soft German Inflation to Drag on the Euro?
Looking past the BoE Brexit report, the Euro Pound (EUR/GBP) exchange rate may continue to retreat in the second half of the week as markets remain focused on German economic data.
Germany’s latest Consumer Price Index is likely to be the centre of attention tomorrow afternoon as economists forecast inflation will have slowed again in November, likely exacerbating concerns that economic activity in Europe’s largest economy remains weak after a shock contraction in GDP in the third quarter.
Meanwhile, the short-term outlook for the Pound suggests Sterling will be marred by volatility in the next couple of weeks as the UK becomes increasingly sensitive to political machinations in the run up to the Parliamentary vote on Theresa May’s Brexit deal on 11 December.