This follows the release of the French business sentiment figures for June, which fell to 102 – the lowest level since November 2016. Euro traders are feeling increasingly jittery as the Eurozone’s second-largest economy follows its largest, Germany, in an increasing trend of decreasing business optimism. Many analysts are expressing pessimism about the Eurozone’s weak growth and inflation, as global trade tensions continue denting sentiment in the single currency. Carsten Brzeski and Inga Fechner, Economists at ING Group, were downbeat in their assessment, saying: “Without a strong recovery, it is difficult to escape the low growth, low inflation and subsequently low rates environment.”
“An economic upturn could quickly be over and monetary policy might not have enough ammunition up its sleeve, with interest rates remaining stuck at the zero lower bound for years to come.”
UK political news has remained in focus today, as the Tory leadership race kicks into higher gear with Boris Johnson at the centre of media attention.
Mr Johnson’s personal life has been causing controversy, as has his refusal to take part in televised debates.
Amber Rudd, the Secretary of State for Work and Pensions, has also challenged Mr Johnson for a clearer statement on his Brexit plan, adding that “enthusiasm and optimism is not sufficient.”
Mrs Rudd commented: “There’s the impasse with the European Union, and there’s the impasse in parliament with MPs.”
“I appreciate Boris’s enthusiasm and his confidence and positivity, but I still think we’re looking for the evidence of what the plan is.”
Pound traders, meanwhile, will be awaiting today’s CBI Distributive Trades Survey figures for June. Any signs of improvement could provide some uplift for Sterling.
Brexit uncertainty, however, is remaining an issue as the leadership race eclipses any further discussions regarding the UK’s future with the EU.
The pound euro exchange rate will likely be driven by political rather than economic developments today.
Any signs that Boris Johnson would be in favour of avoiding a no-deal Brexit could prove pound-positive and would ease fears of a chaotic exit for the UK later this year.