gbp-british-pound-coins - GBP

The pound slipped lower versus the euro heading into the weekend. Since the start of the new year the pound has been under pressure versus the common currency, with the pair declining 0.95% so far in the New Year. The pair closed the previous week at €1.1723. The pound is edging higher versus the euro as the new trading week begins.

The pound closed the previous week on a more somber tone as U.K. data continued to show weakness in the British economy. Both U.K. manufacturing and construction pmi data missed analysts’ expectations. Whilst these surveys are from the politically uncertain time in the run to the UK general election, analysts are not expecting domestic data to show any meaningful signs of improvement.

This week the U.K. economic calendar is light with just the service sector pmi due to be released today. Analysts are expecting the service sector pmi to remain in contraction territory at 49.1. The figure 50 separates expansion from contraction.

The most notable event this week is expected to be a meeting between U.K. prime minister Boris Johnson and European Commission President Ursula Von Der Leyen scheduled for Wednesday. The U.K. Parliament voted in favour of Boris Johnson’s Brexit deal on December 20th. The U.K. is set to leave the EU on 31st January. Investors will be paying close attention to any comments surrounding the transition period. Failure of the U.K. and the EU to reach a trade deal by the end of 2020, the end of the transition period, could result in a cliff edge no deal Brexit. This fear is keeping the pound under pressure.

German Retail Sales & Service Sector PMI Up Next

The euro was broadly subdued across the previous week as the German economy, the largest economy in Europe, showed no signs of an improving outlook. The German manufacturing pmi showed the sector slumped deeper into contraction in December, registering just 43.7.

Today the Eurozone economic calendar will be in focus. The euro could receive a boost from German retail sales figures. Analysts expect retail sales to have increased 1% month on month in November, up from a decline of -1.6% the month previous. Service sector pmi readings will also be in focus. Investors will be keen to seen that the slump in manufacturing is not spilling over into the rest of the economy.

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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