UK Consumer Credit Growth Slump Drags on Pound Sterling Euro (GBP/EUR) Exchange Rate
As UK consumer credit growth fell to its lowest level in five years the Pound Sterling to Euro (GBP/EUR) exchange rate remained under pressure.
This sharp slowdown suggests that UK consumers are taking an increasingly wary view of the economic outlook in the face of ongoing Brexit-based uncertainty.
A muted performance from the mortgage market also helped to drag Pound Sterling (GBP) down against its rivals on Tuesday morning.
Although MPs rejected Boris Johnson’s proposed general election this was not enough to ease concerns over the political outlook.
Even with the Brexit deadline postponed until January investors struggled to find the incentive to shore up GBP exchange rates, with a lack of clarity already clearly dragging on the UK economy.
Euro (EUR) Vulnerable to Fresh Eurozone Business Confidence Decline
Fresh weakness may be in store for the Euro (EUR) on Wednesday, however, if October’s Eurozone business confidence index shows a continued decline.
Forecasts point towards the index dipping from -0.22 to -0.24, highlighting a persistent sense of anxiety among Eurozone businesses.
With economic momentum already looking set to stall further in the fourth quarter any fresh signs of caution could weigh heavily on EUR exchange rates.
Another sharp monthly decline in business sentiment could also put a significant dampener on the mood towards the single currency.
Although no change is expected from the latest German unemployment rate reading this is unlikely to offer the Euro any particular rallying point.
As October’s German consumer price index looks set to ease from 1.2% to 1.1% on the year the case for further European Central Bank (ECB) monetary loosening could build further, shoring up the GBP/EUR exchange rate.
Weak UK Consumer Confidence Forecast to Add to GBP/EUR Exchange Rate Bearishness
Worries over the outlook of the UK economy are likely to persist in the days ahead, meanwhile, with the GfK consumer confidence index set to show another dip.
If consumer sentiment continues to move deeper into negative territory this could put fresh downside pressure on GBP exchange rates.
As higher levels of consumer spending had helped to shore up economic activity in recent years any weakness here bodes ill for the wider outlook.
Without signs of domestic resilience the Pound may struggle to hold onto any positive footing in the near term.
Political anxiety may also weigh heavily on the GBP/EUR exchange rate as Boris Johnson continues to push for a December general election.
If the motion is forced through parliament the Pound is likely to weaken, with investors deterred by the prospect of further political uncertainty.