The pound is falling lower as we end the week after a series of gloomy reports yesterday signalled some sectors are feeling the squeeze post Brexit with particular reference to the automobile and construction industry. GfK consumer confidence figures released overnight also came in much weaker than expected and taking the indicator to a 26 year low. I struggle to see quite how this can be worse than the financial crisis of 2008 but that’s just my view. This morning sees some absolutely paramount data to include European unemployment numbers, EU inflation and EU GDP.
Not only the above but we also have the release of the European bank stress tests which are likely to be damaging for the Euro. The spotlight will be on the Italian banks which are known for being undercapitalised and with bad loans. One in particular and the oldest bank in the world is Monte dei Paschi isx expected to have some problems today.
Anyone buying Euros may be wise to see how this data appears as there could be some better buying opportunities on the back of it. The markets don’t like low growth and bad banks. For anyone selling Euros it may be sensible to get in early or otherwise wait and see what happens nwith the Bank of England meeting next week.
On the UK side data is quiet today but the markets are already looking at next Thursday’s Bank of England meeting where a package of measures is widely anticipated to be announced. A rate cut of 0.25% seems very likely and there may also be some Quantitative Easing to go with that. This would be sterling negative and in my view is the reason the pound is edging lower against most currencies including the Euro as the markets price in the likelihood of this outcome.
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