- Pound (GBP) rises, adding to last week’s gains
- Consumer credit rose strongly in November
- Euro (EUR) falls amid a quiet start to a busy week
- Eurozone inflation data is due on Wednesday
The Pound-Euro (GBP/EUR) exchange rate is rising adding to gains last week. The pair rose 0.16% in the previous week, settling on Friday at €1.1485. It traded between €1.1433 and €1.1496. At 15:30 UTC on Monday, GBP/EUR trades +0.44% higher at €1.1536
The pound is edging higher against the EUR but is falling against the USD at the start of the first full trading week following the Christmas and New Year holidays. Market sentiment remains positive as investors look past the risks surrounding US–Venezuela tensions.
The pound is rising after data showed that UK Consumer borrowing rose by the most in two years in November, according to Bank of England figures. This suggests that household demand remained solid even ahead of Chancellor Rachel Reeves’ budget on November 26.
Consumer borrowing grew by £2.08 billion during the month, the most since November 2023, and more than what was expected by economists. This was also above October’s £1.713 billion rise, taking the annual rate of consumer credit growth to 8.1%.
The Bank of England also noted that the number of mortgages approved by British lenders for house purchases fell to 64,500 in November, down from 65,000 in October. This was still about the 64,400 forecast.
Separately, the pound will be watching politics closely after Prime Minister Keir Starmer’s comments that Britain should seek closer alignment with the European single market on an issue-by-issue basis. Any improvement in relations between Britain and the EU could be considered a supportive move for the pound.
The euro is modestly lower amid a quiet start to the economic calendar. Attention will be on the eurozone PMI data tomorrow. This is the final reading and tends to be less market-moving than preliminary figures.
On Wednesday, eurozone inflation figures will be released. These are expected to show that inflation cooled to 2% year-on-year, in line with the ECB’s target. The ECB is not expected to move again on monetary policy anytime soon, so the data may have a limited impact on the EUR.
