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Surprise Rise in German Trade Figures Leave Euro Pound (EUR/GBP) Exchange Rate Flat

Euro Pound Sterling (EUR/GBP) Exchange Rate Muted as German Economy Breathes Sigh of Relief

The Euro Pound Sterling (EUR/GBP) exchange rate remained flat, leaving the pairing trading at around £0.8405.

Following disappointing German industrial data, today’s trade balance provided the German economy with a welcome bought of relief.

German exports rose by 1.2% month-on-month in October, increasing for the last seven out of ten months.

The single currency was provided with a slight upswing of support as, on average, exports have increased by 0.1% month-on-month, compared to a stagnant reading in 2018.

Despite ongoing global trade tensions and a widespread slowdown, German exports have been able to keep its head above water.

Commenting on this, ING’s Carsten Brzeski wrote:

‘Today’s trade figures are the first positive data for the final quarter of the year. With disappointing consumption and industrial data but encouraging trade data, the economy will remain on a bumpy road between contraction, stagnation and meagre growth.’

Sterling (GBP) Rallies to 31-Month High Against EUR

The Pound remained muted against the single currency on Monday, with just three days left until the UK general election.

However, the Pound was able to reach a 31-month high against the single currency earlier this morning.

Sterling sentiment remained strong as traders continued to remain confident the ruling Conservative Party would remain in power.

Further opinion polls supported this over the weekend, showing Boris Johnson’s party remained ahead by around 10 percentage points.

Added to this, GBP received a slight boost after a further poll from Survation showed the gap between the Tories and Labour was as high as 14 points.

However, some have warned there is still a risk of a hung parliament, and Deutsche Bank’s Jim Reid warned clients:

‘The weekend polls showed a wide spread of Tory leads from 6pts to 15pts but with the average edging back above 10pts after recently dipping below. A reminder that anything below q 6-7 point lead is around hung parliament territory.’

Euro Pound Outlook: Will German Sentiment Boost EUR?

Looking ahead to Tuesday, the Pound (GBP) could edge lower against the Euro (EUR) following the release of the UK GDP data.

If October’s GDP reveals the economy did not expand as much as expected, Sterling could slip.

Meanwhile, December’s German ZEW Economic Sentiment Index could provide a slight upswing of support for the single currency.

If sentiment increases more than forecast, clawing its way out of contraction for the first time in eight months, the Euro Pound (EUR/GBP) exchange rate is likely to rise.