The pound extended gains versus the euro for a third consecutive session on Thursday. The pound advanced an additional 0.2% versus the euro, hitting a high of €1.1862. The pair is on track to have gained around 1% this week alone.
The pound was the top performing G10 currency once again on Thursday as investors continued to price in a Conservative win in the election next week. The polls still point to Boris Johnson maintaining a comfortable lead against his opponents meaning that the Conservatives should be on course for a comfortable Parliamentary majority. The latest poll from ComRes showed that the Conservatives had 42% of the votes whilst Labour 32%. The Tories are consistently scoring 10 points ahead of Labour.
The previous session also saw four high profile Brexit Party MEP’s resign before advocating that supporters back Boris Johnson and the Conservative party. This move should boost support or the Tories further.
Pound investors are linking a Conservative majority with the UK making progress with Brexit. This is the most believable way that the UK will leave the EU on 31st January.
The elections will come at a time when the UK economy is showing signs of weakness. Recent data suggests that the UK economy may have moved back into contraction in the last quarter of the year. Investors are looking for political and Brexit uncertainty to lift in order for the British economy to stabilise.
Will Eurozone Industrial Production Drag Euro Lower?
The euro trended lower in the previous session amid growing concerns over the health of the eurozone economy. The recession gripping German factories showed no signs of easing following yet another fall in factor order. Industrial orders unexpectedly fell -0.4% month on month in October, analysts had been forecasting a 0.4% gain. The reading served to remind investors that the German economy still has a log way to go to overcome the current slump which has dragged on for around a year.
Today German industrial production data will be in focus. Analysts are forecasting an increase in industrial production month on month in October. A weak number could unnerve investors further and weigh on demand for 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.