It might seem like a common topic or view for the moment – but we will commence this morning acknowledging Germany. It’s been a dire time for Germany’s economy to find its feet and increase its economic productivity – on top of this, which was mentioned yesterday Germany is likely to moved ahead with a vote of confidence on the 15th of January. Leading to Germany facing issues and uncertainty not only economically but also political instability. Noticing this morning that Germany’s retail sales was released and we continue to see a downfall. It retracted from a level of 1.6% in its last month, which was seen as positive news – hopeful wishes that their retail sector might start showing signs of improvements to then fall to -1.5% in November. This is the lowest level for the retail sector since March earlier this year. At the same time, Germany’s import prices rose to its highest levels since May – up to 0.6%. A combination that could lead to further short-term issues for Germany’s retail sector – most likely to see an instant effect on the retail sector seeing increasing prices ahead of the Christmas period. European central bank now needs to assess the situation across Europe – seeing not only Germany as a country in the region struggling.
At 10am we might see evidence of the recent development in the European countries, with EU core inflation and inflation preliminary levels being released. Even if its only preliminary data, it could show us an indication of in which direction the overall data could come out at. Moving into the colder seasons – we have started to see energy prices going up – being an inflationary, driving pressure up further for the ECB to lower their borrowing costs.
In the last few days, we have seen GBP gain on the EUR, not down to major economic data releases but that yesterday the US-market was closed due to Thanksgiving. Less liquidity on the markets has favoured investors to hold GBP over EUR with higher interest rate levels, something we call a ‘carry-rate’ and therefor we have once again seen GBP/EUR break the 1.20-mark. The movement started on Wednesday, seeing the rate move from the mid 1.19 mark.
GBP/EUR 1.2013 GBP/USD 1.2680 GBP/AED 4.6606
GBP/AUD 1.9506 GBP/CHF 1.1174 GBP/CAD 1.7764
GBP/NZD 2.1466 EUR/USD 1.0546 GBP/ZAR 22.9269