The pound reached session tops of €1.1797, before dropping over 100 points to a session low of €1.1697 on Thursday. The 0.6% loss is the fourth consecutive session of losses for the pound, which ids on track to have lost -2.4% across the week so far.
As was widely expected, the Bank of England (BoE) kept interest rates on hold at 0.75% in its December meeting. The bond buying programme remained steady at £435 billion per month. Two policy makers voted for a rate cut again, as they did in November. The central bank also said that global growth has shown tentative signs of recovery and adopted a hawkish tilt. The pound surged to session highs.
However, gains were capped, and the pound quickly pared gains and more amid renewed fears that the UK will crash out of the European Union without a deal. No deal Brexit fears resurfaced after newly elected prime minister, Boris Johnson, said he would seek legislation making it illegal to extend the Brexit transition period.
No deal Brexit fears are going nowhere fast. Today Boris Johnson is expected to put his Withdrawal Bill to parliament. He expected to win by a clear majority. Pound investors will also look towards UK GDP data. Analysts are expecting the British economy to have grown a lacklustre 1% year on year in the third quarter for the final reading, in line with the previous reading. Any weakness could send the pound lower.
Will Consumer Confidence Data Boost Euro?
The euro was pushing broadly higher in the previous session on an improved mood in the market. The German Dax rallied to an all time high as risk appetite increased. US Treasury Secretary Steve Mnuchin said he is confident that US — China first phase trade deal will be signed in January. Investors had grown concerned over the lack of details on the trade deal. However, Mnuchin’s comments stirred up optimism once again.
Today the euro could find itself supported today as investors look ahead to German GFK consumer confidence data and eurozone consumer confidence. Analysts are expecting both data points to show an improvement, supporting the idea that the Europe’s largest economy and the bloc as a whole are starting to turn a corner.
| 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. |
