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Pound euro exchange rate: GBP rises against EUR on Italy and Germany woes


Sterling has gained on the euro after figures revealed that Italy had fallen into recession at the end of 2018, while German consumers stopped spending in December. The publication of Italy’s Q4 GDP figures revealed a fall of -0.2 percent, the second successive quarter of economic contraction, meaning that the Italian economy had entered a technical recession. Euro sentiment was furthermore hit by the publication of German retail sales figures for December earlier today which plummeted -4.3 per cent – their fastest rate of decline in 11 years. French yearly CPI inflation figures for January however, exceeded expectation at 1.4 per cent, although the news did little to uplift the single currency.

Meanwhile, the publication of the UK Gfk consumer confidence for January was also disappointing, and remained at -14 – its lowest since 2013

Joe Stanton, the client strategy director at Gfk, said: “[C]onsumers are not capitulating on how they feel about their personal finances, even though the score here is essentially neutral.

“But there are economic worries going forward.

“UK consumers can do nothing about this; they have to wait for events to unfold in Westminster and Brussels.”

Appetite for the euro was further dampened by the publication of the Eurozone’s Q4 GDP figures, which continued to show a downward trend at 1.2 per cent – leaving markets wary on signs of a slowing economy.

In UK political news, concerns are rising over whether Theresa May can secure a deal with Brussels over the newly-amended Brexit withdrawal deal, with the EU showing an increasing unwillingness to renegotiate terms on the Irish backstop.

Pound traders are now focusing on the possibility of an extension to Article 50, which Mrs May has not ruled out, with the Foreign Secretary, Jeremy Hunt, also remaining open on the issue today.

Mr Hunt said: “I think that depends on how long this process takes…

“We can’t know at this stage exactly which of those scenarios would happen.”

Following today’s poor eurozone data markets will now be focusing on tomorrow’s inflation and manufacturing figures to see if there are any more signs of lacklustre growth in the bloc.

If eurozone inflation is revealed to have slowed in January, as is forecast, the GBP/EUR exchange rate could rise further. 



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