- Eurogroup is meeting this week
- ECB Executive Board Member Philip Richard Lane will give a speech later today
The British pound is down against the euro on Monday afternoon in what appears to be a technical pullback after big gains made last week. Markets are a little quieter thanks to the Presidents Day holiday in the United States and there is little in the way of economic data from the United Kingdom or Europe to drive currency prices.
GBP/EUR was lower by 36 pips (-0.30%) at 1.2006 with a daily price range of 1.20 to 1.205 as of 2pm GMT.
GBP to EUR rolled over after a test of its Friday peak near 1.205 and held just above the 1.20 round figure. Today’s losses see the exchange rate give up some of last week’s 2.26% gain.
Shock announcement last week that Javid will be replaced by Sunak, still digested by investors
The kneejerk positive reaction on the prospect of greater government spending is being replaced by some caution.
Without getting too heavily into the politics of it, some investors fear that No.10 Downing Street is making a power grab to control the Treasury. That could have longer term detrimental effects on the way money is spent by the UK government, even if in the short term the economy may benefit from looser purse strings.
ECB Executive Board Member to talk about about deteriorating European economic growth
The Eurogroup is meeting this week and ECB Executive Board Member Philip Richard Lane will speak later today. One topics of conversation is likely to be the deteriorating European economic growth that has sent the euro spiralling to multi-year lows against several major currencies, including the British pound. On Friday, Germany reported its economy had stagnated in the fourth quarter, registering zero growth. The other two largest economies are not faring much better, with France and Italy both flirting with recession.
In recent years it was the core counties such as Germany and France that were pulling the peripheral counties kicking and screaming into economic prosperity. In the last couple of years, things have turned around with the economies of Spain, Portugal and even Greece outperforming. Because the core economies are so much larger, they have a much larger bias on Eurozone data.
