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Pound Euro Exchange Rate Wavers amid Sweeping Industrial Action

Pound coin on a Euro banknote

GBP/EUR Exchange Rate Stutters amid Multiple Economic Headwinds

The Pound Euro (GBP/EUR) exchange rate is fluctuating as a quiet day of trading across the board left the currency pairing exposed to risk sentiment. Domestic looks set to keep a firm lid on Sterling as waves of national strikes threaten to dent the UK economy.

At time of writing the GBP/EUR exchange rate is around €1.1593, relatively unchanged from this morning.

Pound (GBP) Subdued amid Relentless Economic Disruptions

The Pound is failing to muster much support amid a lack of data. Domestic headlines dominate trading conditions as rail strikes look to disrupt the hospitality industry.

Amidst the cost-of-living crisis, which has seen living costs soar and wages fall, workers across the UK have had to turn to union action as a last-ditch attempt to improve working conditions. However, the knock-on effect could be devastating for pubs and restaurants. Christmas parties have seen cancellations soar by 30%, leaving a black hole in revenues worth more than £1.5bn.

Looking ahead, and with the trading calendar remaining thin, Sterling will be left vulnerable to domestic headwinds. GDP growth is expected to improve and snap a two-month contraction streak. Market forecasts a 0.4% rise in economic growth, which could lend some much-needed support to the volatile Pound.

Euro (EUR) Undermined by Geopolitical Tensions

Meanwhile, the Euro (EUR) struggled for a clear direction today amid a lack of major data. A relatively downbeat risk sentiment weighed on the single currency as President Putin talked of a nuclear threat.

Positivity outside of China continues to support the global risk sentiment with further easing of the zero-Covid policy. Shanghai announced this morning that Covid tests will no longer be required for entertainment venues and restaurants.

However, Putin poured cold water on risk sentiment and talked of a potential nuclear war. Talking at Russia’s annual human rights meeting, Putin warned that the Ukraine conflict could be ‘a lengthy process’. Further souring market sentiment, Putin also said that the threat of a nuclear war was rising:

‘Such a threat is growing, it would be wrong to hide it. We have not gone mad, we are aware of what nuclear weapons are.’

Looking ahead, a speech from the European Central Bank (ECB) President Christine Lagarde could see the Euro climb on any hints towards the interest rate decision next week. Despite the speech focused on financial stability challenges in the Euro area, any comments on inflation or recession could inspire EUR investors.

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