The euro has found strength in the news that Italy has managed to avoid the European Union’s sanctions after agreeing to reduce its controversial budget deficit from 2.4 per cent to 2.04 per cent. EU Economic Affairs Commissioner Pierre Moscovici commented that it was a “victory of political dialogue” that will strengthen the euro. The pound is still recovering from yesterday’s softening inflation figures for November, which showed a decrease to 0.0 per cent against last month’s 0.1 per cent. Theresa May is still rallying to gain Parliament’s backing for her Brexit withdrawal agreement after last week’s failure to renegotiate crucial aspects of her deal with the EU.
Amber Rudd, the Minister for Work and Pensions, said: “Parliament has to reach a majority on how it’s going to leave the European Union…
“We are going to have to find a way, as MPs, of working together to find a consensus, of agreeing on how to stop no-deal taking place.”
Sterling investors have remained cautious about the weakness of her Brexit withdrawal agreement and the possibility that the UK will face a chaotic Brexit vote in January.
Today saw the release of UK retail sales figures for November which showed an increase of 1.4 per cent against last month’s -0.4 per cent, which was far better than economists had anticipated.
The euro, meanwhile, might find some strength if tomorrow’s German Gfk consumer confidence survey figures for January show any signs of an increase.
Friday will also see a slew of UK data stats, the most notable being the Q3 GDP figures, with pound traders paying close attention to any signs of a slowing economy.
Also on Friday we will see the publication of the UK Gfk consumer confidence figures for December which are expected to decrease.
Meanwhile the euro is likely to be affected by any further political upheavals in France, with the recent capitulation of French President Emmanuel Macron to the ‘yellow vest’ protestor’s demands for tax reforms has dented market confidence in the Eurozone ahead of the festive season – potentially strengthening the pound euro exchange rate.