The pound edged tentatively lower versus the euro on Wednesday in a quiet session. The pound euro exchange rate slipped to a low of €1.1604, before closing down 0.2% on the day.
The pound dipped in quiet trading in the previous session as the investors looked towards the election polls. Parliament was officially dissolved, and the election campaign began, with Boris Johnson once again vowing to get Brexit done by January 31st.
A YouGov poll showed that support for Boris Johnson fell by 2 points to 36%. The pound dropped on the news. Boris Johnson needs a strong win to push his Brexit deal quickly through Parliament. His deal is pound positive as it would end the Brexit uncertainty that has lingered for year and it means the UK would also avoid a no deal Brexit.
Today investors will turn their attention to Super Thursday, where the Bank of England will give its monetary policy announcement, release the minutes from the meeting and update the market with its quarterly inflation report. This is due to be the last BoE decision led by Mark Carney.
Analysts expect the central bank to leave interest rates unchanged at 0.75%. The meeting minutes are expected to show an unanimous decision to leave policy unchanged. As long as no policy maker dissents, the focus will be on the quarterly inflation report forecast’s and Mark Carney’s tone.
Whilst there is a relative calm surrounding Brexit right now some analysts believe that the BoE could drop its hawkish bias, as Brexit uncertainty continues to weigh on the economy and inflation fails to pick up. Should the BoE abandon its hawkish bias, the pound could fall.
Will German Industrial Production Data Drag On The Euro?
The euro was under pinned by positive data for the bloc on Wednesday. German factory orders were significantly better than what analysts had been expecting, adding to signs that the eurozone economy is over the worst of its recent problems. Factory orders jumped 1.3% month on month in September, well ahead of the 0.1% gain analysts had pencilled in. The euro rose after the report and held onto those gains across the session.
Today investors will be watching German industrial production data to see if the improvements in the sector are showing through in the industrial production data. The European Central Bank economic Bulletin report will also be under the spotlight. Any hints that the ECB is becoming less concerned over the heath of the eurozone economy could boost 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.
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