The pound pushed higher versus the euro in the previous session, reaching a peak of €1.1752. GBP/EUR closed the session near the high, up 0.5% on the day at €1.1743. The pair is advancing in early trade on Friday. The pound euro exchange rate has had a mixed week and is heading into the final day of trading at approximately the same level that it started the week.
The pound advanced in the previous session despite concerns of an imminent rate cut from the Bank of England. Data this week has been disappointing. Inflation came in at a three-year low at 1.3%, well below the BoE’s 2% target, whilst figures showed the UK economy contracted -0.3% in November raising fears of a recession. The current economic climate points to a rate cut. If UK economic data doesn’t improve in the coming weeks the BoE could ease policy on 30th January at the next MPC meeting.
Today the UK economic calendar will remain in focus as investors turn to UK retail sales data for December. The retail sales figures will include sales from Black Friday, so they are expected to be significantly higher than last month when retail sales slumped for a fourth straight month. Concerns have been growing over the health of the most resilient sector of the economy.
Upbeat ECB Minutes Failed To Boost Euro
The euro slipped lower in the previous session despite upbeat European Central Bank minutes from the December meeting. Comments in the minutes that there are “mild indications that core inflation is rising” are supportive of the euro. However, the central bank was more cautious on the economy as a whole.
The euro is also under pressure as he US dollar strengthens. The euro trades inversely to the greenback. Encouraging US retail sales lifted the dollar, dragging on the euro.
Today the euro could receive a boost with the release of eurozone inflation data. Analysts are expecting consumer prices to have increased in December to 1.3%, up from 1% in November. Whilst this is still considerably below the ECB’s 2% target, it is a move if the right direction, which could underpin the common currency.
|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.