Yesterday Eurozone finance ministers met to discuss the EU’s current fiscal policy stance. The EU could look to follow suit of the UK with a boost to their fiscal stimulus through increased public spending. The EU currently operates on a more “broadly neutral” approach, but suggestions from the ECB noting that the economy would benefit from increased spending may lead to a more aggressive approach being taken by the Eurozone. Meanwhile, the GBP fell out of favour with investors as comments from the French foreign minister re-ignited fears of a no-deal Brexit. But the GBP has a chance to recoup its losses later today as it awaits its jobs data for December which have been tipped to show upticks.
Eurozone Rethinks Its Fiscal Policies in a Bid to Find More Support
Eurozone finance ministers met yesterday to discuss the EU’s fiscal policies. In a bid to increase support for the euro, the finance ministers considered adopting a new approach and boost public spending. Previously, the Eurozone has operated under a “broadly neutral” approach, but after calls for more spending from the European Central Bank and worrying signs of a slowdown in the Germany economy, the EU’s hand looks to have been forced into making the call. But should the Eurozone revise their policies, it will still need to comply with EU fiscal rules which mandate deficits below 3% of gross domestic product, amongst other requirements.
GBP Loses Footing as French Foreign Minister’s Comments Re-Ignite No-Deal Brexit Fears
Meanwhile, for the GBP, it saw a decline on Monday after comments from the French foreign minister stated that the EU and UK would likely rip each other apart during the negotiation process leading up to the December Brexit deadline. Though he stated that this is only natural as each side looks to defend their interest, it was not positive news for investors and thus reopened the door for no-deal Brexit fears. As a result, the GBP lost favour within the market.
Jobs Data Could Help GBP Edge Back Over the Euro
Looking forward to later today, the GBP could recoup its losses as its UK ILO unemployment rate report is set to be released. Should the report evidence the rate to sit near the record-lows of the previous month, the GBP is likely to benefit. Following this will be the UK average earnings report which has been forecast to show a 3% rise. Should this be the case the GBP is likely to receive further support from investors.
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