The pound euro (GBP/EUR) exchange rate is falling at the start of the week.
The pound is under pressure despite rising inflation expectations and tentative signs of recovery in UK confidence. Business surveys showed the strongest month since July, consumer confidence hit its highest level since August, and retail sales rose at their fastest pace since April.
However, a weak labour market continues to weigh on firms, which have cut hiring after last year’s tax hikes.
The euro edges higher despite soft German data. IFO business sentiment remained unchanged at 87.6 in December, pointing to stalling economic momentum. The data suggests a stellar rebound is unlikely near term.