The pound stormed higher at the start of the week. The pound euro exchange rate rallied to a weekly high of €1.1723. The pair held onto these gains heading into the close, finishing the session on Monday up 0.46% at €1.1709. The pair is holding steady in early trade on Tuesday.
The pound climbed higher in the previous session as the polls continued to show that the Conservatives are maintaining a solid lead over opposition parties. Boris Johnson and the Conservatives are the firm favourites to win the elections on 12th December, pledging to bring to an end three and a half years of Brexit uncertainty.
The Tories are now on track to win with a majority in the region of 50 seats. Bookies have reduced the odds of a hung Parliament. All of the 634 Conservative candidates in this coming election have pledged to back Boris Johnson’s Brexit deal. Therefore, should the Conservatives win the election, then it is more believable that a Brexit deal will be achieved, and the UK will leave the EU by 31st January in an orderly fashion.
Adding to support for the pound, Boris Johnson unveiled his election manifesto at the weekend which promised a moderate increase in spending of £2.9 billion per year, compared to Labour’s £83 billion spending spree.
The UK economic calendar is quiet today leaving UK election speculation to take centre stage.
German Consumer Confidence Data In Focus
The euro trended lower across the board in the previous session after German IFO expectation index undershot forecasts. Analysts had expected a reading of 92.5, however the index only managed 92.1. Whilst the German headline business climate index rose in line with expectations. However, delving deeper into the numbers the report revealed that Germany’s manufacturing sector is still stuck firmly in recession.
Today investors will look towards German GFK consumer confidence for further clues as to the state of the German economy. Market participants are expecting household confidence to remain steady at 9.6 in December. Investors will want to see signs that German consumer remain confident and that the deep contraction in manufacturing is not spilling across into the consumer sector. Any signs of weakness could worry euro investors and send the common currency lower.
|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.