GBP/EUR Exchange Rate Down as UK’s House Price Growth Hits Six-Year Low
The Pound Euro (GBP/EUR) exchange rate is down, and is currently trading at €1.1210, after the release of today’s UK Halifax house prices.
The Euro’s gains against the Pound were trimmed this morning by the release of the Eurozone’s Q3 GDP figures, which revealed an unexpected 0.1% decrease on the previous quarter’s figures – slowing to a quarterly rate of growth of 1.6% on a year-on-year basis.
The Euro (EUR) had been benefitting from yesterday’s release of Germany’s factory order figures for October, which showed a better-than-expected increase, as well as some Italian retail sales figures for October, which also increased.
Following the disappointing Eurozone GDP figures, however, EUR strength was further limited by a shock slowdown in German industrial production figures, which revealed a contraction of -0.5% in November when economists had expected to see a healthy expansion.
In some less bad news, France’s trade balance figures for October were released, showing a figure of €-4.10bn – a clear improvement from September’s figure of €5.424bn.
GBP/EUR Exchange Rate Dips as Markets Remain Cautious Ahead of Brexit Vote
As mentioned above, the Pound (GBP) was hit by the release of the Halifax house price growth rate for November, which decreased to -1.4% against last month’s 0.7%.
Jonathan Samuels, CEO of the property lending company, Octane Capital, commented:
‘The lowest rate of growth for six years is a reflection of how Brexit uncertainty has hit the property market . . . All the ingredients for extreme uncertainty, both political and economic, are in the mix.
These were followed, however, by an increase in the Bank of England’s consumer inflation figures, which showed the British public expected inflation to rise to 3.2% in a year’s time.
Brexit remains in focus for many GBP investors as Prime Minister Theresa May desperately battles to bolster support for her UK-EU withdrawal agreement, with markets remaining cautious ahead of the 11 December Commons vote.
Euro Pound (EUR/GBP) Exchange Rate Up despite Drop in Germany’s Industrial Production
The Euro (EUR) was hit today by the release of Germany’s industrial production figures for October, which revealed a -0.5% contraction.
However, these were followed by France’s industrial output figures for October, which increased on last month.
Following these came the Eurozone Q3 employment change figures which remained static.
EUR investors remained cautious as Italy’s Prime Minister Giuseppe Conte is still due to announce a revised budget, with concerns that the new one will also be rejected by the European Commission.
This came on the back of Italy’s Deputy Prime Minister Luigi Di Maio’s comments yesterday in which he said:
‘In our talks with Europe I have gathered that what they expect from the budget is that we lower public debt as much as possible, and this can’t be done by imposing austerity.’
GBP/EUR Outlook: Brexit and Italy’s Budget Remain in Focus
The Pound Euro (GBP/EUR) exchange rate will likely be driven by political forces next week, with the 11 December Commons Brexit vote looming, GBP investors will be paying close attention to any further developments.
Monday will see the European Court of Justice announce its ruling on Article 50, which may enable the UK to unilaterally revoke Article 50. This also comes at a crucial time, with Parliament due to vote on May’s Brexit withdrawal agreement the following day.
Also on Monday we will see the release of the UK’s GDP figures for October, with investors paying close attention to any changes in growth.
These will also be followed by a slew of other ecostats for the UK, including manufacturing production figures for October and the non-EU trade balance figures.
Italy’s budget will probably remain in focus for EUR investors next week, as uncertainty still lingers over whether the EC will be initiating a disciplinary procedures against the Eurozone’s third-biggest economy.
EUR may find further strength from any signs of an increase in Germany’s imports and exports figures for October which are due to be released on Monday.