EURGBP In Focus After Recent UK Election

EURGBP has data released for Germany this week as the dust settles on Labour’s UK election win. 

EURGBP – Weekly Chart

EURGBP – Weekly Chart 

EURGBP is trading below the previous strong support of around 0.85. There is no room below for a test of lower levels at 0.8346 and 0.8250. 

The British pound has been stronger after the French elections and an election in the UK. 

Investors are assessing the outlook for taxes and interest rates in the UK after the Labour Party won last week’s election by a landslide. Labour has promised an overhaul of the welfare system. However, the main focus will be reducing economic inactivity and getting more people into the workforce. 

Marine Le Pen won the first round of elections in France but not with the projected initial majority. That keeps Emmanuel Macron’s party safe for now but only adds confusion about the country’s future path of government. Many voters are angry with Macron’s extended term and want to see changes happen soon. Any downturn in the economy in Europe would cause these tensions to worsen. 

Data is released for the pair on Thursday, with inflation figures for Germany and growth figures for the UK coming out at 2 p.m. HKT. 

The German pricing data is expected to dip from 2.4% to 2.2% as inflation continues in the Eurozone. The UK’s growth figures are expected to be 0.7%, equal to the previous month. The annual figure is expected to be 1.2% from 0.6%. 

Economists noted last month’s figures, showing consumers spent much more than expected on clothing and furniture. Better weather is also likely to have improved the construction sector. 

Analysts at Capital Economics said they expected the “economic recovery to resume in May,” Deutsche Bank said growth in the UK would “bounce back”.

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