Summary:
Sterling rose against the euro as Bailey said the BOE must carefully assess the impact of higher employer national insurance before rate cuts.
Sterling edged up against the euro on Wednesday after Bailey said the BOE must approach interest rate cuts carefully based on assessment of the impact of the rise in employer national insurance contributions.
Moscow issued a stern warning to President Biden on Tuesday, lowering the threshold for a potential nuclear strike. This announcement came just days after reports emerged that the US had allowed Ukraine to launch American missiles deep into Russian territory.
Barring further geopolitical turmoil, analysts predict the pound may strengthen against the euro. The UK, being a consumer-driven economy, is unlikely to become a focal point for the incoming US administration, providing some stability for the currency.
In contrast, Germany’s economy faces stagnation in the final quarter of the year, according to the country’s central bank. Challenges such as a softening labour market and potential new trade tariffs are compounding economic uncertainty.
Adding to Germany’s woes is the upcoming national election triggered by the collapse of its ruling coalition. A new government could potentially reform the debt brake policy to mitigate recession risks, a move closely watched by economists.
Meanwhile, the euro continues to struggle under the weight of the dollar’s surge. Analysts at Amundi project the euro may fall to the critical $1 mark within a month before rebounding to 1.16 by the end of 2025.
A breach of 50 SMA and MACD divergence point to more potential gains for the euro against the pound. The resistance lies around 0.8400 which is followed by 0.8440.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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