The Pound to Euro exchange rate (GBP/EUR) has risen slightly today, although this comes in spite of a pessimistic outlook for UK wage growth in 2018.
TUC Predicts Poor UK Wage Growth in 2018, GBP/EUR Exchange Rate stays Strong
The Pound has seen a marginal advance against the Euro today, along with greater gains against other regular peers.
This advance comes on a mixed day of UK news; on the downside, the Trade Union Congress (TUC) has estimated that UK wage growth will sink considerably in 2018.
The union forecasts that UK average earning growth will be the lowest among 32 wealthy nations, based on recent figures from the OECD.
While the TUC has estimated that both Spain and Italy could see negative wage growth in 2018, even these nations are predicted to beat the UK for overall growth.
In more positive news, the Confederation of British Industry’s (CBI) 2018 statement has struck a somewhat optimistic tone.
CBI Director-General Carolyn Fairbairn has stated that;
‘2018 must be a year of unity, clarity and urgency, at home as well as on Brexit.
We must get on, at speed and with great determination, with adapting our economy for the future.
One thing is certain – business has a vital role to play in building a bright future for our country.
The CBI and the thousands of firms we represent look forward to working in close partnership with a united government to improve lives for everyone in 2018’.
Fairbairn has warned that the UK faces a ‘skills emergency’ and that innovation needs to be supported, but the overall message suggests that these are solvable problems.
Euro to Pound (EUR/GBP) Exchange Rate Drops after Italian Election Date Announcement
The Euro has lost ground to the Pound today, trading down because of uncertainty about the 2018 Italian general election.
The date for this event has now been confirmed as 4th March, putting pressure on traders as they try and predict the outcome.
Although the Dutch, French and German elections passed with little real incident in 2017, the 2018 Italian election risks seeing Eurosceptic parties take over.
If the Eurosceptic 5 Star Movement seems likely to take victory next year, the Euro could drop sharply as traders panic about future Eurozone instability.
Pound to Euro (GBP/EUR) Exchange Rate could Drop on Disappointing January PMIs
In the New Year, the Pound risks declining against the Euro during the first week of January.
Sterling could drop if the UK manufacturing, construction and services PMIs show slowing activity in December, as this would represent a bad end to 2017.
Current forecasts are for slowing construction and manufacturing, but no actual change in services sector activity.
The Euro might be impacted sooner than the Pound, when this afternoon’s German inflation rate figures are released.
Initial estimates are for an annual decline in the inflation rate, which could reduce confidence in the Euro and devalue it.
