- Pound (GBP) falls amid a lack of fresh catalysts
- REC survey shows a tepid improvement
- Euro (EUR) rises as German trade balance improves
- Eurozone retail sales are due
The Pound Euro (GBP/EUR) exchange rate is falling after gains last week. The pair rose 0.76% in the previous week, settling on Friday at €1.1620 and trading in a range between €1.1509 – €1.1633. At 10:00 UTC, GBP/EUR trades -0.07% at €1.1613.
The euro is heading higher after an improvement in German factory orders and the German trade balance, which is helping to boost the mood after losses last week.
German exports rebounded in November, rising by 3.7% month on month after falling 0.4% in October. Meanwhile, November imports increased by 1.9% month on month, increasing the trade balance to 20.4 billion, up from 17.7 billion in October.
The data is encouraging; however, one stronger print doesn’t mark the start of a new trend. The improvement in November comes after a long stretch of disappointing data, and it’s likely to be a technical improvement rather than a substantial turnaround.
Meanwhile, German factory orders rose 0.3% after tumbling 3.8% on a monthly basis in October.
The data comes after retail sales last week tumbled 2.5% month on month in November much worse than expected.
Recent data from Germany shows that the economy is struggling with a recession, likely at the end of last year, and weakness continuing at the start of 2024.
Looking ahead, attention now turns to eurozone retail sales, which are expected to fall 0.3% after rising 0.1% month on month in October. Weaker-than-expected retail sales could raise concerns over the health of the consumer in the eurozone area amid record-high interest rates and a tick higher in inflation.
The pound is drifting lower amid a lack of fresh catalysts to drive Sterling.
According to the Recruitment and Employment Confederation (REC) survey published today, hiring of permanent workers continued to shrink in December as employers were concerned about the health of the economy. However, the trend was not as severe as it was in November.
British employees raised pay and recovered some of their appetite for hiring, which the Bank of England may see as another sign of inflationary pressures lingering in the labor market.