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After a weak start to Tuesday, the pound euro exchange rate rebounded off session lows of €1.1628, advancing to highs of €1.1682. This was the second straight session of gains. The pair is advancing in early trade on Wednesday.
The pound initially dipped lower on Tuesday after disappointing UK jobs data. The latest figures released by the Office of National Statistics showed that UK wage growth slowed in the three months to September. Average earnings increased 3.6%, down from 3.8% growth the previous month. The data also showed the largest annual drop in the number of job vacancies as the labour market weakens ahead of Brexit. Slowing wage growth will keep the pressure on the Bank of England to cut interest rates as the next move rather than raise them. As a result, the pound slipped.
The pound rallied later in the session after the latest election polls showed that Boris Johnson and the Conservatives extended their lead after the Brexit party decided not to stand against them. The latest YouGov poll put the Conservatives at 41%, Labour at 28% and Lib Dems at 15%. A strong lead by the Conservatives is the surest way for a Brexit deal to be pushed quickly through Parliament and the UK leave the EU on 31st January with a deal.
The pound could come under pressure today as investors look towards UK inflation figures. Analysts expect inflation ticked lower in October to 1.6%, down from 1.7%. Inflation moving further away from the Bank of England’s 2% target could drag on the pound.
German Inflation & EZ Industrial Production In Focus
The euro was broadly out of favour in the previous session, despite encouraging German ZEW sentiment data. Data showed that the mood among German investors improved by more than expected in November. Optimism amid progress in US — China trade talks and an improved international economic environment helped lift sentiment. The euro shrugged off the better than expected data.
Today euro investors will look towards German inflation figures. Analysts expect inflation to remain steady at 1.1% in October. Eurozone industrial production is also due to be released. Analysts expect a -0.2% month on month decline in September, down from 0.4% growth the month previous. The weak data could drag on the euro.
| What do these figures mean? |
| When measuring the value of a pair of currencies, one set equals 1 unit and the other shows the current equivalent. As the market moves, the amount will vary from minute to minute.
For example, it could be written: 1 GBP = 1.13990 EUR Here, £1 is equivalent to approximately €1.14. This specifically measures the pound’s worth against the euro. If the euro amount increases in this pairing, it’s positive for the pound. Or, if you were looking at it the other way around: 1 EUR = 0.87271 GBP In this example, €1 is equivalent to approximately £0.87. This measures the euro’s worth versus the British pound. If the sterling number gets larger, it’s good news for the euro. |
