UK election talk sent the pound 0.2% higher versus the euro on Tuesday. The pound euro exchange rate advanced to a high of €1.1619 in the previous session.
The pound jumped on Tuesday after Labour, the opposition party, agreed to support Boris Johnson’s call for a general election. Labour leader Jeremy Corbyn agreed to the election as the threat of a no deal Brexit has been removed. The House of Commons voted overwhelmingly in favour of a general election.
The UK will go to the polls between December 12th . The pound rallied because Boris Johnson is the favourite in the polls. Boris Johnson will be hoping to win a stronger mandate from the UK electorate to push Brexit through Parliament. Pound investors hope that the election could unlock the logjam over the UK’s departure from the European Union. As a result, the pound is advancing. However, the reality is that the election could create further uncertainty, potentially putting a no deal Brexit back on the table for January.
Germany CPI, Unemployment, EZ Consumer Confidence
The euro struggled for direction in the previous session amid a lack of macro data. After a quiet start to the week on the economic calendar, things are set to pick up today. The most closely watched release today will be German inflation figures. Analysts predict that inflation, as measured by the consumer price index, declined year on year in October to 1.1%. Core inflation, which excludes more volatile figures such as food and fuel is also expected to decline to 0.85 in October, down from 0.9%.
Inflation, in Europe’s largest economy moving further away from the 2% target will unnerve the European Central Bank and euro investors. The central bank eased monetary policy in September. However weak inflation figures would imply that the central bank still has more work to do as Germany appears to be slipping into recession.
German unemployment data is expected to show that the level of unemployment remained stable at 5%. Any signs that the labour market is starting to crack could unnerve investors. Eurozone consumer confidence and France’s GDP will also be in focus.
|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.
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