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The sterling vs euro interbank exchange rate stands at 1.1715 today. This is close to its lowest in over two weeks, or since December 3rd.

The pound stands near this fortnight low versus the common currency, first because UK Prime Minister (PM) Boris Johnson will today introduce his legislation, to “legally prohibit” the UK’s future EU trade deal talks going beyond the end of 2020.

The PM will add this clause, as part of the Withdrawal Agreement Bill (WAB), Parliament’s legal name for the Brexit agreement that PM Johnson agreed with former European Commission (EC) President Jean-Claude Juncker, in October.

Following last week’s UK election, PM Johnson enjoys an 80-seat majority in the House of Commons, so it’s thought that the amendment will smoothly pass.

However, for investors, this risks the possibility that the UK might “crash out” of Europe by December 31st 2020, without new trade arrangements, thereby weakening sterling.

UK Retail Sales Fall in November as BoE Holds Rates at 0.75%

UK retail sales fell by -0.6% in November, said the Office for National Statistics (ONS) on Thursday, below forecasts for a 0.3% rise.
The Bank of England held UK interest rates at 0.75%, as predicted, yet maintained open the possibility of a cut next year, if UK economic growth and inflation don’t pick up.

This morning, we’ll learn the UK’s revised GDP (Gross Domestic Product) growth figures for Q3, from July to September, which is forecast to remain at 0.3%.

This is the last major UK economic release of 2019. If the data surprises above or below this figure, it could affect the pound.

Eurozone Consumer Confidence Data Due as Lagarde May Surprise in 2020

Today the euro bloc’s consumer confidence figures for December are released by the EC at 15.00 GMT, and forecast at -7.0, from November’s -7.2.
However, this is a relatively minor release, so looks unlikely to earn the financial markets’ attention, unless the results arrive significant above or below forecasts.

This is the Eurozone’s last economic release of 2019, although turning to 2020, we’ll see what steps new European Central Bank (ECB) President Christine Lagarde takes, to prop up the bloc’s economic growth and inflation. If Ms. Lagarde surprises next year, this might impact the euro.

By James Lovick

Source: Pound Sterling Forecast

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