European Stats Hold up Currencies
Following the publication of Germany’s December Producer Price Index, the euro rose against the pound. The statistics rose from 0% to .1%, and the year on year numbers exceeded forecasts at -.2%. However, traders are cautious following last week’s signing of the US-China deal. There are concerns that any increase in geopolitical tensions, whether between the US and China or the US and the Middle East, could jeopardise confidence in the euro as these tensions hold back potential foreign trade investments.
Today we’re expecting some the ECB’s lending survey report, which will give analysts an indication of the ECB’s direction for the future. If that shows signs that its monetary policy choices are taking a downturn, then expect to see the euro weaken.
We could also see the pound move, as the UK ILO unemployment trade report from November is due to be published. It is forecast to hold steady at 3.8%. However, if this dips below expectations, sterling might weaken and the likelihood of the Bank of England cutting interest rates could increase.
How Will Brexit Day Impact Currencies?
The next big date for the euro, and its rival across the English Channel, will be 31st January, when the UK is scheduled to officially leave the EU (although in theory, nothing will be different on 1st February given the UK will be entering the transition period). Markets are speculating what will happen to currencies on this fateful day, whether the pound and the euro will rise, and what will happen throughout the year as negotiations take place.
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