GBP/USD: UK Wages & Inflation Disappoint Pound Figures vs. Dollar?

The pound was well matched versus the euro on Wednesday. The pair hit a peak of €1.1682 before paring gains and closing flat on the day.

Pound investors remain fixated on the December 12th election, with the Conservatives widely expected to win. The Conservatives still hold a strong lead over the Labour party in the polls, even after the live TV debate earlier in the week, where both leaders Boris Johnson and Jeremy Corbyn put a solid performance.

A You/Gov poll immediately following the TV debate saw Boris Johnson come out as the winner by just 51% to 49%. The fact that Jeremy Corbyn is almost on an equal footing with his rival in the debate supports political analysts’ theory that these results actually mark a loss of ground for Boris Johnson, which would explain the pound’s loss of momentum.

Sterling is tracking the odds of a Conservative win. Any shifts in the polls could cause volatility as pound traders are tying a Conservative win with an increased probability of a Brexit deal being ratified and the UK leaving the European Union by 31st January in an orderly fashion. The most pound positive outcome aside from Brexit just disappearing.

The pound is treading water as it awaits further opinion polls. In the meantime, investors could glance towards the release of public sector net debt data. This will play second fiddle to any election headlines.

Could ECB Minutes Boost Euro?

The euro was under pressure in the previous session as investors digested the European Central Bank’s Financial Stability Report. The ECB warned of the potential side effects of its loose monetary policy. Years of policy designed to support the eurozone financial system could in fact be contributing to the erosion of financial stability in the bloc. The report comes after the ECB restarted an unlimited quantitative easing package and cut interest rates in September.

Investors will now look ahead to a busy day on the eurozone economic calendar with the release of the OECD economic projection, which is expected to reinforce concerns over economic slowdown. The minutes from the latest ECB meeting will also be closely eyed. There is growing unease in the central bank over the easing policy. A growing opposition to easing could boost the common currency.

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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