- Pound (GBP) underpinned by Brexit optimism
- Manufacturing PMI beats forecasts at 55.6 in November
- Euro (EUR) surges across the board, boosted by USD weakness
- German retail sales data up next
The Pound Euro (GBP/EUR) exchange rate is treading water on Wednesday. The pair settled -0.4% lower on Tuesday at €1.1113 after recovering from a session low of €1.1102. At 05:15 UTC, GBP/EUR trades just 2 pips lower at €1.1111.
UK factories recorded their fastest level of growth since 2017 in November amid Brexit stock piling and rushing to complete orders before post Brexit customs rules come into force on January 1st.
The IHS Markit/CIPS manufacturing PMI rose to 55.6 in November, up from 53.7 in October and above the flash estimate of 55.2. Whether the up tick in manufacturing can be sustained into the new year remains to be seen.
Brexit optimism continues to support the Pound, which rallied versus other major peers. Headlines point to a deal being agreed by the end of the week, but then this wouldn’t be the irst time that those headlines have been thrown around. Still, the Pound is taking it seriously, moving broadly higher even after sources from both camps tried to pour cold water on the market’s enthusiasm. Senior British Minister Michael Gove said that there was still a very real chance of a no trade deal Brexit.
Euro strength amid US Dollar weakness continues to be a key theme as the common currency surged to a two year high versus the US Dollar. News that a group of US bipartisan lawmakers offered a new $908 billion covid relief package dragged the US Dollar sharply lower boosting the common currency.
The Euro shrugged of inflation data which revealed that consumer prices fell -0.3% year on year in October. Meanwhile the German manufacturing PMI was downwardly revised, yet the Eurozone’s was upwardly adjusted.
Looking ahead, Germany is due to release German retail sales data, which are expected to rise 1.2% month on month.