The pound trended lower versus the euro across the previous session. The pair hit a nadir of €1.1654 on Tuesday, before picking up slightly to close down 0.2% at €1.1671.
The Johnson – Corbyn live televised debate was the central focus for pound traders on Thursday. Whilst both sides claimed victory following the debate, voters backed the PM 51% to Jeremy Corbyn’s 49%. This YouGov snap poll after the debate puts the two leaders on a much more equal footing than the polls across recent weeks, which show that Boris Johnson has a solid 18-point lead.
Boris Johnson’s lead over Jeremy Corbyn has offered support to the pound, helping it rally to a six-month high earlier in the week as investors grow increasingly confident that through a Boris victory the UK will avoid a no deal Brexit.
However, the slight weakness that is starting to show through in the pound could be investors looking beyond Brexit on 31st January, to the trade talks which will take place thereafter. Should the UK leave the EU with a deal, there will be an 11-month transition period when the trade talks with the EU are set to take place. These 11 months could also be a testing time for the pound.
A slight improvement in Confederation of British Industry (CBI) Industrial trends orders index also failed to boost the pound on Tuesday. The CBI index improved to -26 in October, up from -37. The moderate improvement in sentiment was insufficient to lift the pound. Concerns over the health of the UK economy have plagued investors across recent months. Whilst the UK has so far manged to avoid a recession, Brexit uncertainty has dragged on the British economy, so much so that that the dominant service sector has stagnated.
Eurozone Financial Stability Report Eyed
The euro advanced versus the pound is the previous session, despite a surprise decline in eurozone construction output. Construction output in September declined by -0.7% on the year rather than increasing 2.7% s analysts had forecast. The data is not high impacting data, however it still served to cast a how over the health of the eurozone economy. Whilst eurozone economic growth remained resilient in the third quarter, the risk of a fourth quarter slow down remains.
Today investors will look towards the release of the eurozone financial stability report, prior to the minutes from the European Central Bank monetary policy meeting on Thursday.
|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.