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14th of November 2018

Economy



Pound euro exchange rate: Sterling reaches 4-month high as Macron calls for a “Euro army”

Citing threats from a range of foes, including Russia, China, and even the United States, Mr Macron said it was essential to combat external threats, as well as threats closer to home.

Speaking to Europe 1 Radio, Mr Macron said: “We won’t protect Europeans if we don’t decide to have a real European army.”

“We must have a Europe that can defend itself on its own without relying only on the United States.”

Seeming to reference the recent rise in populism across the EU, from Britain to Italy, Mr Macron spoke of an “increasingly fractured” Europe, using the occasion of the 100 year anniversary of the end of WW1 to issue his warning. 

GBP/EUR traders, however, chose to shift their gaze away from Europe and focus on UK politics yesterday, with Sterling boosted by an innocuous comment from Brexit Secretary Dominic Raab.

Mr Raab was leaving a cabinet meeting on Brexit when he uttered the words “thumbs up” to a pack of reporters, with his words causing an immediate and sustained rise in the GBP/EUR pairing, pushing it up to a four-month high. 

This morning, with markets mostly focused on the fallout from the US midterm elections, GBP/EUR is flat, although that could change later on when the latest Eurozone retail sales figures are released.

Italy’s figures have already come out and revealed a sharp drop-off in spending, with September’s year-on-year rate contracting by -2.5 per cent – proving that the retail slowdown is not just a UK phenomenon.

Eurozone figures could follow this trend, with economists currently expecting to see a fall of -0.2 per cent in September, on a monthly basis.

Other than the retail sales figures, today is a light day for data in both the UK and the Eurozone, leaving the GBP/EUR exchange rate to be driven by political factors and broader global market risk sentiment.  

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