The pound was trading lower against the euro in early Wednesday trading after German Retail Sales beat analyst expectations and fears over Brexit talks grew.
The GBPEUR pair was trading 0.30% lower at 1.1080 after German Retail Sales posted an 8.2% rise against expectations of a 5.9% gain. Brexit talks were also weighing on Sterling with the two sides still struggling to find common ground on three key issues as the clock winds down.
Further Data Ahead for the GBPEUR This Week
The pound to euro exchange rate could see further data-led volatility this week starting with today’s unemployment rate for Italy and then the Eurozone. Italian unemployment is expected to rise to 9.9% compared to last month’s 9.6% number. The Eurozone release is expected to tick higher to 8.4% compared to last month’s 8.3% reading. Tomorrow will see final Purchasing Manager’s Index (PMI) data for the UK and Eurozone ahead of EU retail sales numbers.
The data sets are being clouded by the most recent lockdowns, and traders are pessimistic about the numbers into year-end.
BoE Policymaker Sees Little Immediate Vaccine Boost to Economy
Bank of England (BoE) policymaker Silvana Tenreyro said this week that a Coronavirus vaccine was only likely to show a real economic boost once it was widely used in the country.
“As economists, we often focus on the idea that positive news about the economic situation in the future will lead more confident consumers to spend more today. But since the positive news is about future health outcomes, some may be more inclined to postpone spending on many goods and services until vaccines and reduced health risks actually arrive.”
Brexit talks are heading into a crucial period with a deal required this week or next. Despite claims that the deal was 95% done two weekends ago there is still no formal agreement and a deal would have to go through UK and EU politicians, alongside the EU27 countries. Investors should cast their mind back to the drama in the UK Parliament during Theresa May’s attempts at passing a Brexit deal. The chance of a No Deal scenario is still very much a possibility and there is still headline risk that can harm the GBP to EUR forecast.
The talks have continued in London and negotiators are seeking to resolve disagreements over fishing rights in UK waters, a level playing field for business and the enforcement arrangements for a deal.
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