- Pound sterling firmed in the previous session as no trade deal Brexit fears eased, at least for the moment, and investors looked optimistically towards Boris Johnson’s spending plans
- The euro traded broadly flat versus its major peers on Monday, despite disappointing investor sentiment data
Pound sterling trended higher versus the euro on Monday. The pound euro exchange rate rallied to a 5 day high of €1.1846 at the start to the week amid optimism surrounding UK infrastructure spending plans.
Meanwhile the euro slipped on disappointing data and political concerns. GBP/EUR closed the session 0.5% higher, ahead of a busy day for data today.
GBP firmed as no trade deal Brexit fears eased, investors more optimistic on Boris Johnson’s spending plans
The pound firmed in the previous session as no trade deal Brexit fears eased, at least for the moment, and investors looked optimistically towards Boris Johnson’s spending plans. The Prime Minister gave the green light to High Speed Railway 2 (HS2) at the weekend. He also spoke of his enthusiasm for a bridge to connect Northern Ireland with Scotland. Increased government spending can have an inflationary effect, raising the possibility of an eventual rate hike from the central bank. As a result, the pound advanced.
Today the spotlight will fall on a raft of UK economic data releases which could inject some volatility into the pound. The most closely watched release today will be U.K. GDP; the preliminary fourth quarter reading. Analysts are expecting economic growth to be flat quarter on quarter, as growth in household consumption is expected to be offset by falling inventories and slowing foreign trade.
Euro traded broadly flat versus its major peers, despite disappointing investor sentiment data
The Sentix investor confidence index fell in January by more than analysts had forecast, declining to 5.2 in December down from 7.8 the previous month. This was the first fall in morale in 4 months, as concerns over the potential impact of coronavirus on the global economy starts to hit confidence.
As the number of people infected with coronavirus increases and the death toll rises, investors are questioning its impact on the global supply chain. Questions are being raised as to whether this is a short-term shock or whether this will be a prolonged hit on the economy.
Today there is no high impacting eurozone data for investors to focus on. Instead several European Central Bank policy makers will be giving speeches. These could provide further insight as to where the ECB intends to take monetary policy going forward.
| 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. |
