The euro ticked higher on Monday, supported by stronger-than-expected trade data from Germany.
Meanwhile, the pound is trading in a narrow range so far this morning, with GBP/EUR flat at €1.1629, and GBP/USD stable at $1.2746. GBP/CAD is rangebound at CA$1.7024, while GBP/AUD and GBP/NZD tick up to AU$1.9014 and NZ$2.0412, respectively.
Coming up, will another slide in German industrial orders place the euro on the back foot today?
What’s been happening?
The euro trended broadly higher at the start of this week, supported by Germany’s latest trade data. November’s figures showed a sharper-than-expected jump in export growth, with the country recording its largest trade surplus since the start of 2021.
An uptick in Eurozone economic sentiment at the end of 2023 also reflected positively on EUR exchange rates. Although a contraction in retail sales in November ultimately limited the single currency’s upside potential.
In contrast, the US dollar weakened on Monday as the currency fell in tandem with US Treasury yields.
These losses were reinforced by a positive shift in market risk appetite through the second half of the European session.
At the same time, the increasingly risk-sensitive pound was able to firm amid the more bullish market mood.
What’s coming up?
Today’s session kicked off with the publication of Germany’s latest industrial production data.
The euro is facing some headwinds after today’s figures reported that factory production unexpectedly contracted again in November.
However, there is a chance for the single currency to rebound later this morning, if the Eurozone’s latest jobs data reports that unemployment in the bloc held near record lows in November.
Meanwhile, market risk appetite may continue to act as the main catalyst of movement for the pound and US dollar, amid the continued absence of any notable domestic data.
If sentiment remains upbeat this could see Sterling extend its gains as the ‘greenback’ remains under pressure.
