The sterling vs euro interbank exchange rate stands at 1.1765 today. This is close to yesterday’s 1.1763, although 2.59% below the pound’s recent 39-month high against the Eurozone’s common currency, its strongest since September 3rd 2016, reached last Friday 13th, at 1.2076.
One reason why the GBP to EUR interbank rate is nearly unchanged, is because markets are awaiting more information about Prime Minister (PM) Boris Johnson’s Brexit strategy.
Earlier this week, PM Johnson announced that he’d amend the Brexit Withdrawal Agreement Bill to prohibit the government extending the UK’s future EU trade talks beyond the end of 2020.
The PM will introduce this legislation in Parliament tomorrow, where it’s expected to easily pass, given that following last week’s election, the Conservatives enjoy an 80 seat majority.
BoE Could Signal UK Interest Rate Cut in 2020 Today, Make Impact GBP
Before that, today the Bank of England (BoE) announces its last UK interest rate decision of this year, at 12.00 GMT.
The central bank is being increasingly tipped to ease monetary policy below its current 0.75%, because the UK’s inflation stands at 1.5%, below the BoE’s 2.0% target, and because PM Johnson looks set to extend the Brexit uncertainty into next year.
Robert Wood, economist at BofA Global Research, says that “We expect the BoE vote to stay at 7-2 as they wait to see incoming data. But the weak data flow suggests a risk of a third voter for a cut (perhaps Gertjan Vlieghe).” If the BoE leans closer toward cutting British borrowing costs, this might influence the pounds value.
UK Retail Sales Fall in November, German Consumer Confidence Stats Due Tomorrow
Elsewhere, it’s worth noting that UK retail sales fell by -0.6% in November, said the Office for National Statistics (ONS), below forecasts for a 0.3% rise.
Retail sales make up a significant part of the UK’s GDP (Gross Domestic Product), so this raises the risk of Britain’s economy contracting in Q4, from October to December.
This is particularly the case, because IHS Markit’s UK PMIs (Purchasing Managers Indices) for October and November have indicated falling business activity, so this could impact sterling.
Turning to the Eurozone, Germany’s consumer confidence figures for January are revealed tomorrow at 07.00 GMT, and pencilled in at 9.8, so a figure above or below this may affect the euro.
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