The pound pushed higher versus the euro on Tuesday. The pound euro exchange rate gained 0.2% to close the session at €1.1757. The pound is edging higher in early trade on Wednesday.
The pound trade broadly mixed versus its peers on Tuesday. With no high impacting UK economic data to focus on and with Brexit headlines at a minimum there was no new catalyst to drive movement in sterling.
U.K. Parliament reconvened on Tuesday after the Christmas recess and continued scrutinising the legislation needed to implement the prime minister’s Brexit deal. With Parliament back in session attention will move towards the transition period and trade negotiations. The UK has just one year to hold negotiations with the EU in order to secure a trade deal. This is a short time frame within which to hold complex talks. Fears that the two sides won’t be able to agree a deal in the one-year period pulled the pound from post-election highs.
An announcement by Boris Johnson that the UK will negotiate a free trade deal with the US and the EU at the same time in bid to pile pressure on the EU is offering some support to the pound.
Today there is no high impacting U.K. data to drive the pound. Headlines from Boris Johnson’s meeting with European Commission President Ursula Von Der Leyen could drive the pound. Ursula Von Der Leyen has already expressed her concerns over the tight time frame to agree a trade deal. More headlines along those lines could unnerve pound investors.
Germany Factory Orders & Eurozone Business Confidence Up Next
The euro was broadly out of favour in the previous session despite strong data prints. Eurozone inflation ticked higher, as analysts predicted, to 1.3% year on year, up from 1%. Eurozone retail sales also smashed expectations increasing 1% month on month in November, up from a -0.3% decline in October. German construction activity also hit a 9-month high. Data is starting to point to a bottoming out in the economy.
Today eurozone data will remain firmly in focus with analysts expecting to see an improvement in German factory orders and eurozone business confidence. Further signs of recovery could help lift 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.