- Pound (GBP) falls after modest gains yesterday
- UK construction PMI fell to 53.3 from 55.2
- Euro (EUR) is rising despite German recession worries
- German factory orders & retail sales fell
The Pound Euro (GBP/EUR) exchange rate is inching lower after gains on Tuesday. The pair rose 0.1% in the previous session, settling on Tuesday at €1.2062. It traded in a range between €1.2037 and €1.2076. At 10:00 UTC, GBP/EUR trades -0.05% at €1.2061.
The euro is rising despite Weak data from Germany. German industrial production plunged 5.4% month over month in November, significantly worse than the 0.2% decline forecast and marks the largest drop in three months. This highlights the industries were ahead of the German elections next month.
The weakness in factory orders comes amid a drop in large-scale orders. There are few signs of the situation in German industry recovering.
Meanwhile, German retail sales were also disappointing, falling 0.6% month over month in November despite hopes of a boost from pre-Christmas promotions. Economists had expected a 0.5% increase in sales.
The outlook for the German economy is gloomy, with a recession in the final quarter looking possible.
Adding to the gloom for the eurozone economy, economic sentiment dropped sharply to 93.7 in December, down from 95.6.
Wholesale inflation was higher than expected at 1.6% month on month in November after rising 0.4% in October. The data comes after eurozone CPI inflation rose 2.4% month on month in December.
The pound is falling modestly after data showed that activity in Britain’s construction industry grew at its slowest pace in six months. The construction PMI for December dropped to 53.3 from 55.2 in November, marking its lowest level since June.
The weaker construction sector activity will lead to a fall in in-house building, as builders say they face headwinds from higher interest rates and weaker consumer confidence.
Britain’s economy showed signs of losing momentum in the second half of last year, partly due to the large-scale tax increases in the Labour government’s first budget at the end of October.
