GBP/EUR reached a 2.5 year high yesterday breaking above the 1.21 mark, 1.2103 to be exact. Recent development in Germany is causing politic uncertainty, with a vote of confidence for the running government to take place in January. This was also fuelled by planned tariffs from the US, with America being Europe’s largest trading partner. In other words, we are seeing more of EUR weakness rather than GBP and USD strength. The market motive of negative impacts on Europe could well be ‘sticky’ and linger around until we have a full idea of how tariffs will be shaped and get a better outlook on Germany’s political situation. We have seen a GBP/EUR pullback slightly in this morning session, moving around the 1.2060 region.
German inflation levels rose in October, noticing a month-on-month incline of 0.4% – moving Germany’s inflation level back to 2% year-on year. ECB members recently stated that they did not want to see its largest economy, Germany, inflation levels to rise above the 2% mark – potentially forcing the European Central Bank to further rate cuts. Europe already holding their base rate of interest rates lower than the UK and US – still seeing economic difficulties and on top of that had political instability in France earlier in the year, its second largest economy and now fuelled with political chaos in Germany. Until we can grasp what the next steps will be from Germany politically – Europe’s economic growth will be questioned – pushing foreign investment out of Europe (that we have already seen) causing a downward spiral for the EUR.
UK’s unemployment numbers rose for September to 4.3%. This indicates that the job market has cooled down – after August shown signs strength reporting more jobs created than expected. With September doing the opposite, did businesses hold off recruitment until they had a clearer idea of how the Autumn budget would entail? Well, after both national insurance and taxes increased from the budget – there is factors that could continue the down ward slope for job opportunities, if we exclude temporary roles over the Christmas period.
GBP/EUR 1.2058 GBP/USD 1.2803 GBP/AED 4.7050
GBP/AUD 1.9583 GBP/CHF 1.1295 GBP/CAD 1.7875
GBP/NZD 2.1553 EUR/USD 1.0608 GBP/ZAR 23.1757