The pound to euro exchange rate has posted a fresh six month high this morning at 1.1692 before slipping back in to its current range on the back of poor retail sales.
Sterling Marginally Slides as UK Posts Weaker Than Expected Consumer Spending Figures
The headline figure released demonstrated an unexpected decline of – 0.1pc in October against the expected 0.2pc growth, adding signs to overall weakness in economic growth in the UK. Consumer spending has been the ‘iron-rod’ in the Brexit back through the second half of 2019 as consumers head to the high street in the face of weaker inflation levels and an uplift in wage prices. However, Tuesday’s employment data for the UK showed that wage growth was slowing as the claimant count continues to fall. Job vacancies sit at a 10 year low.
This had counteracted the slack seen in business spending due of Brexit uncertainty. Thomas Pugh, UK economist at Capital Economics said that there was little evidence of stockpiling ahead of the 31st October Brexit deadline and that “overall, it is increasingly clear that the risks to our forecast for GDP growth in Q4 appear on the downside.”
The pound however, remains boosted toward the higher end of its recent trading range against the euro as the bias for sterling strength moves us a notch higher on the interbank to 1.1829 (at the time of writing) and above in comparison to the low 1.16’s.
Donald Tusk Comments on Brexit
Meanwhile outgoing European Council president Donald Tusk used a football analogy to express his views on the UK position with Brexit, even going so far to admit that he wishes to see the decision to leave the EU reversed. When questioned whether he thought it possible to see things turn around Tusk stated, “So the only words that come to my mind today are simply: Don’t give up. In this match, we are already in extra time, perhaps it will even go to penalties.” This has had little impact on exchange rates as a Conservative majority and an orderly Brexit continue to look like the most likely outcome when the UK head to the polls on December 12th.
German Economy Avoids Technical Recession
From the Eurozone Germany has managed to avoid a technical recession posting a disappointing 0.1pc growth in GDP for the third quarter of 2019 however business sentiment remains weak with German companies not expecting any improvement in export conditions in the coming months with the talks between Beijing and Washington appearing to falter over farm purchases reigniting tensions in the Trade War and quashing optimism that the global markets may see some relief from cooling pressures.
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