The EURGBP exchange rate will have data from the UK and Europe on Wednesday.
EURGBP – Daily Chart
The price of EURGBP has been looking to secure a low around the 0.8300 level. The first obstacle to further gains comes in at 0.8448.
Data ahead on Wednesday comes in the form of European producer prices at 3pm HKT. That will show if European firms are passing on inflationary prices, but the trend has been in decline.
Data will also be released at the same time from the British economy with consumer price index numbers. The inflation pressures have also been lowered in the UK but rates are not coming down in a quick manner.
In the UK on Tuesday, thousands of farmers descended on Westminster to protest against the new government’s inheritance tax raid. Farmers are concerned that their future business will be impacted and the ability to pass on their legacy to their children will also be hampered. The protests are one more criticism against the Labour government which has already broken its manifesto to avoid any tax hikes on workers.
Consumer confidence data for the UK this week showed a hit in November after rising earlier in the year, with concerns the trend may decline further into 2025. The S&P Global Consumer Sentiment Index (CSI) showed a decrease in confidence from 47.3 in October to 46.9 in November.
Chris Williamson, Chief Business Economist at S&P, said: “ongoing pressure on household finances has resulted in squeezed spending, higher debt, and lower savings”. Bank of England Governor Andrew Bailey says he voted to cut borrowing costs due to the “pace and progress on disinflation”, which was faster than expected.
Slower inflation and economic worries about the UK economy have the euro in bounce mode and data ahead could test the recent rally ahead of the next central bank meetings.
For the European Central Bank, there should be a “focus on the sluggishness of the real economy” and move official interest rates into “neutral, or even expansionary, territory,” said ECB policy member Leon Panetta.
Both the European and UK economies have been struggling to see real growth with Britain showing a 0.1% quarterly gain recently.
