The pairing stabilised this morning following some better-than-expected mortgage approval figures from April, which rose to 66.26k. At the same time the UK GfK consumer confidence figures for May, came in at an eight-month high for the month at -10 against April’s -13, providing a further boost for pound sentiment. However, Joe Staton, an executive at GfK, said: “Consumers will need to be convinced in heart, head and wallet that Brexit’s murkiness has finally come to an end.” Meanwhile in Brexit news, the Confederation of British Industry (CBI) has warned the Conservatives over the dangers of leaving the EU without a deal.
In an open letter to the Government, the CBI stated: “Short-term disruption and long-term damage to British competitiveness will be severe if we leave without one.”
“The vast majority of firms can never be prepared for no-deal, particularly our [small and medium-sized] members who cannot afford complex and costly contingency plans.”
Labour leader Jeremy Corbyn has also stated his preference for a soft Brexit, however he also said that a second referendum is “some way off”, thus leaving Sterling traders feeling jittery with no-deal fears.
This morning saw the release of Germany’s retail sales figures for April, which fell below the consensus increase of 0.1 per cent and dropped by -2.0 per cent, weighing on market confidence in the eurozone.
These were followed by Italy’s GDP figures for the first quarter, which fell to a disappointing 0.1 per cent against the previous quarter’s 0.2 per cent.
This has not provided an encouraging backdrop for the Italian government’s plan to resist the EU with an increased budget deficit.
Euro traders await the publication of the German consumer prices figures for May, which are expected to ease.
The pound euro exchange rate will be driven by political developments into next week, and with Brexit uncertainty rising, as well as the leadership of the Conservative Party still remaining in question, Sterling traders are likely to remain cautious.