- Pound (GBP) looks towards 20-month high
- BoE Governor Andrew Bailey to speak
- Euro (EUR) slumps as business sentiment drops
- German GFK consumer confidence & GDP data
The Pound Euro (GBP/EUR) exchange rate is heading higher on Thursday, extending gains from the previous session. The pair settled 0.07% higher on Wednesday at €1.1896 after rising to €1.1926 earlier in the session, just shy of 20-month high of €1.1938 reached earlier in the week. At 05:45 UTC, GBP/EUR trades +0.04% at €1.1901.
The Euro skidded lower in the previous session after data revealed that the German business sentiment continued to fall in November. The closely watched gauge fell to 96.6, down from 97.7 in its fifth consecutive monthly decline.
Sentiment was hurt by supply chain bottlenecks and rising costs even before the fourth wave of COVUD really hit Germany. The data is backwards looking. However there are rising concerns over the surging COVID infections and the impact that these could have on the economy should more restrictions be brought in.
Today the focus remains very much on the economic calendar with the release of German GDP data and GFK consumer confidence. The Q3 GDP data is the final reading which means that it is quite out of date. However, the GFK consumer confidence is forward looking to December. Consumer confidence is expected to fall to -0.5 next month, down from 0.9 in November reflecting those COVID concerns. A weak reading could send the Euro lower.
The Pound gained ground versus the Euro but fell versus the US Dollar. The pound found some support from hawkish comments from Bank of England policy maker Silvana Tenreyo. A known dove, Tenreyo was sound slightly more hawkish when she said that she is thinking about a rate hike in the medium term.
Today is another quiet day for the UK economic calendar. Attention will be on a speech by BoE Governor later in the day. Andrew Bailey has been accused of wrongfooting the market in recent weeks after he appeared to build for a rate cut in November which never happened.
