A spokesman at the Office for National Statistics (ONS) comments on today’s report: “The UK economy saw no growth in the latest three months. There were increases across the services sector, offset by falls in manufacturing with factories continuing the weak performance seen since April.” Today also saw the release of the UK Industrial Production figure for October, which came in below forecasts 0.1 percent as factories struggled amid ongoing Brexit uncertainty and a slowing global economy.
However, the pound remained generally unmoved against the euro today as economic data has taken on second fiddle to British political developments ahead of Thursday’s general election.
Sterling traders are instead awaiting this evening’s release of the updated YouGov MRP poll.
Any signs of the Labour Party narrowing their gap with the Conservatives would prove pound-negative due to increased fears of a hung parliament this week.
Conversely, if the poll suggests an overwhelming majority win for the Tories on Thursday we could see the pound rise against the euro on returning confidence that Brexit uncertainty could be resolved by January 31.
Meanwhile, the euro failed to gain on the pound after today’s release of December’s German ZEW Survey of Economic Sentiment, which beat forecasts and rose from -2.1 to 10.7.
Analysts at Reuters commented: “The mood among German investors improved far more than forecast in December…, with an unexpected rise in October exports boosting hopes for an upturn in Europe’s biggest economy.”
However, the single currency struggled to capitalise on today’s positive data as the outlook for the Eurozone’s economy still remains bleak amid the EU’s trade tensions with the US and slower global growth.
Looking ahead, the UK’s political developments ahead of Thursday’s UK general elections will continue to drive the pound to euro exchange rate this week, with any hints of a hung parliament being pound-negative.