The Pound Euro (GBP EUR) exchange rate is fluctuating this morning as markets react to the Bank of England’s (BoE) latest Financial Stability Report.
Sterling’s (GBP) Volatile as Carney Warns of Impact of Brexit
The Pound is a little unsteady this morning as investors scrutinise the BoE’s Financial Stability Report, with the central bank continuing to warn about the consequences of Brexit.
The BoE’s report revealed that every one of the UK’s major lenders had passed the bank’s stress test for the first time since the financial crisis, suggesting that they would be able to handle a ‘disorderly’ Brexit.
This comes after the bank warned in previous reports that UK financial institutions needed to shore up their capital reserves in order to cushion against any economic upsets.
However while the BoE Governor Mark Carney was confident that the UK’s major banks would still be able cope in ‘the unlikely event’ of a ‘no-deal’ Brexit, he still warned that such a scenario would be very painful for the UK economy.
The BoE’s report also pointed out other concerns over Brexit, warning that the government would need to do more to reduce the risk’s facing the economy.
Euro (EUR) Lifts as German Consumer Confidence Stabilises
At the same time the Euro is strengthening this afternoon following the release of Germany’s latest consumer confidence data.
According to data published by the Market research firm GfK Germany’s latest consumer confidence index is holding at 10.7 in December.
This follows two consecutive drops in sentiment over the past couple of months and is bolstering hopes that the Christmas period will lead to a pickup in economic activity.
However some observers warn that the recent breakdown in Angela Merkel’s coalition talks with the FDP and the Greens could weigh on consumer confidence over the coming weeks.
Analysts at GFK wrote;
‘Consumer confidence is stabilising towards year’s end after two small drops in a row, although it remains to be seen whether the consumer mood could be sapped by the failed talks for a coalition.’
GBP EUR Forecast: German Inflation to Rise in November?
Looking ahead the GBP EUR exchange rate may retreat on Wednesday with the release of Germany’s latest CPI figures, with economists forecasting that inflation will have picked up slightly in November, rising from 1.6% to 1.7%.
Meanwhile the Pound is likely to struggle to fend off any advance by the Euro tomorrow as analysts predict that the UK’s latest mortgage figures will show that home loan approvals fell from 66,230 to 65,000 in October.
Current Interbank Exchange Rates
At the time of writing the GBP EUR exchange rate was trending around 1.1162 and the EUR GBP exchange rate was trending around 0.8955.
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