- Pound (GBP) edges higher, PM uncertainty limits gains
- UK economy grew 0.9% MoM in November
- Euro (EUR) drifts lower with no data due
- German GDP rose 2.7% in 2021
The Pound Euro (GBP/EUR) exchange rate is edging a few pips higher adding to gains in the previous week. The pair climbed 0.17% across last week, settling on Friday at €1.1975, after spiking up above €1.20, to a fresh 23 month high. At 05:45 UTC, GBP/EUR trades +0.03% at €1.1981.
The pound gained ground at the end of last week as data from the Office of National Statistics revealed that the UK economy returned to its pre-pandemic sizes in November last year. The economy grew 0.9% month on month in the pen-ultimate month of the year. This was up from 0.1% in October and significantly ahead of forecasts of 0.4%.
Whilst the data pushed the UK economy to above its pre-pandemic level, economic growth could ease in December as Omicron took hold and prompted Downing Street to impose some new restrictions.
Whilst data lifted the Pound last week, rising uncertainty over UK Prime Minister’s Boris Johnson’s future kept gains in the pound limited. Whilst ministers are supporting Boris Johnson to remain in power, backbenchers are ramping up pressure for the PM to resign over the partygate scandal, which saw a “party” held at 10 Downing Street whilst the rest of the party was in lockdown.
This week there is plenty of data to keep Pound traders busy, with UK inflation data, labour market numbers and retail sales figures due.
The Euro came under pressure in the previous session after the ECB Economic Bulletin warns over the uncertain impact of Omicron on the global economic recovery, weighing on the near-term growth prospects.
However, the ECB remains upbeat over the growth prospects for the Eurozone in the coming year.
Separately the German economy grew by 2.7% in 2021, after more of COVID restrictions and also mounting supply chain issues, particularly microchip shortages in the second half of the year. The world’s fourth largest economy remains short of its pre-pandemic level.
There is no high impacting Eurozone data due to be released today. German ZEW economic sentiment data is due tomorrow.