Despite domestic headwinds, the Pound Euro (GBP/EUR) moved up on Monday as an optimistic market tone supported GBP.
Following a sluggish start to the session on Monday, the Pound (GBP) rebounded. Throughout Monday, the market environment gradually became better, supporting the more risk-averse Pound despite domestic challenges.
The accounting and business consultancy firm BDO said early on Monday that all of its monitored indices had decreased. The organization discovered that optimism, output, employment, and inflation had all decreased in a survey of more than 4000 enterprises.
However, as the day went on, investors who were trying to buy a deal amid brisk bullish action were not deterred much by the unfavorable scenario in the UK.
Following expectations from the European Commission (EC) that the Eurozone will escape a recession in 2023, the Euro (EUR) strengthened versus the majority of its major peers on Monday.
On Monday morning, the EC released its winter prediction, outlining its expectation that the bloc will avoid experiencing a recession in 2023 as a result of recent improvements.
The economy of Europe is proving to be robust in the face of the current problems, according to Valdis Dombrovskis, Executive Vice-President for an Economy that Works for People.
In addition, although being safer, the single currency received support from the optimistic market sentiment. Due to its negative association with the “Greenback,” the Euro was able to gain some ground by applying pressure to the US Dollar.
The single currency may not have made significant gains, nevertheless, due to worries over further escalation in the conflict between Russia and Ukraine. Concerns about potential future escalations are high as the battle continues to rage and shows no signs of ending, especially after Russia claimed to have made progress on the frontline.
The unemployment and pay growth figures that will be released on Tuesday are expected to be the main drivers of change for the British pound (GBP). The statistics is expected to reveal that the UK’s unemployment rate stayed at 3.7% in December and that average wages only increased by 6.2%, down from the previous reading of 6.4%.
As a result, the Bank of England (BoE) may have more flexibility and motivation to keep raising interest rates, which might raise the value of the pound.
Further decreases in real pay, however, might fuel concerns about further strike activity because salaries are a major bone of contention between unions and trade ministers.
Macroeconomic data for the Euro (EUR) is predicted to be scarce in the near future. As a result, the value of the single currency may continue to fluctuate based on market conditions and its association with the US Dollar.
The single currency may also gain if the US Dollar’s downward trend continues because of the pairing’s negative connection.