Bert Colijn, Senior Economist for the Eurozone at ING, was also downbeat in his analysis, saying: “The months ahead are likely to remain tricky for the Eurozone.” “[The fourth quarter] is off to a rough start and while recent news about global economic risks like the [US-China] trade war and Brexit have been promising, downside risks remain for the moment.”
The euro came under further downward pressure after German retail sales rose by a less-than-expected 0.1 percent, suggesting that private consumption is still losing steam in the Eurozone’s powerhouse economy.
Meanwhile, the pound rose despite today’s release of October’s GfK consumer confidence figure, which eased to a six-year low from -12 to -14.
However, UK markets have remained fixated on political developments ahead of the December 12 general election.
Joe Station, Client Strategy Director at GfK, commented: “This deterioration in sentiment regarding our personal financial affairs is worrying as strong consumer spending has been the main driver of economic growth since the referendum in 2016.”
“[C]onsumers are witnessing too many Brexit shifts and surprises, too many Brexit timelines and counter-proposals to justify any longer-term confidence.”
The pound has benefited from markets increasingly betting on a Conservative victory in the upcoming election, with the YouGov poll now showing the Tories ahead of Labour with a 15-point lead.
However, with Brexit delayed and a polarising election campaign not due to start in earnest until next week, the pound to euro exchange rate could hold onto today’s gains into the weekend.