EUR GBP Opens Higher with German Data Ahead

The EUR GBP exchange rate was higher on Monday by 0.15% as traders await the latest German consumer confidence data. Results were also being counted for the German election, but markets expect a three-way coalition for the country with months of talks to form a coalition.

The EUR to GBP rate trades at the 0.8575 level ahead of the day’s data release and will see further European data later in the week.

German consumer data to lead the euro versus pound rate

Monday will see consumer confidence data for the German economy with markets expecting a further slowing to -1.8 from -1.2.

German consumers are becoming more cautious after recent virus cases and supply chain bottlenecks have also affected the economy. A survey last week by the IFO institute showed German business confidence lower in September fell for a third straight month. German IFO economists said that supply chain shortages had worsened in September and saw no signs that they would ease.

Despite this, ECB President Christine Lagarde said that the inflationary pressures were temporary and would fade after this year.

Further data this week will see German employment with the unemployment rate forecast to stay put at 5.5%. German inflation is also expected to show an increase from 3.9% to 4.2% as companies feel the pinch of higher prices.

Evergrande default fears could still weigh on the euro

Evergrande Group’s electric-car business plunged in Hong Kong trading after it warned of a “serious shortage of funds” and scrapped plans to list shares in Shanghai.

Shares of China Evergrande New Energy Vehicle Group dropped by as much as 26% in early trading, adding to their decline this year which now sits at 94%. The company has lost than $84 billion in market cap from its peak in April.

In a statement on Friday, Evergrande NEV said it has suspended paying some of its operating expenses and some suppliers have suspended work. The statement confirmed Bloomberg’s report that the company had missed salary payments to some workers.

Concerns that China’s second-largest property developer could default on its $305 billion of debt has sparked contagion fears for Asian businesses and financial markets. The People’s Bank of China has injected 100 billion yuan ($15.47 billion) into the financial system, adding to the net 320 billion yuan last week, which is the most since January.

Some local governments in China have also set up special custodian accounts for Evergrande property projects to protect funds earmarked for housing projects.

Germany’s export economy relies on China and could be hit by a cascading default in the country. Investors will be following the headlines closely this week after markets recovered from a sell-off into Wednesday.

Ratings agency Fitch sought to soothe fears with its latest report, saying:

“The impact from a China Evergrande Group (CC) credit event on rated Chinese construction issuers will be manageable because they have limited exposure to Evergrande.”

In the UK, Boris Johnson was set to call in the military to help with fuel deliveries as petrol stations run dry from recent panic buying.

The EURGBP exchange rate was higher on Monday by 0.15% as traders await the latest German consumer confidence data. Results were also being counted for the German election, but markets expect a three-way coalition for the country with months of talks to form a coalition.

The EUR to GBP rate trades at the 0.8575 level ahead of the day’s data release and will see further European data later in the week.

German consumer data to lead the euro versus pound rate

Monday will see consumer confidence data for the German economy with markets expecting a further slowing to -1.8 from -1.2.

German consumers are becoming more cautious after recent virus cases and supply chain bottlenecks have also affected the economy. A survey last week by the IFO institute showed German business confidence lower in September fell for a third straight month. German IFO economists said that supply chain shortages had worsened in September and saw no signs that they would ease.

Despite this, ECB President Christine Lagarde said that the inflationary pressures were temporary and would fade after this year.

Further data this week will see German employment with the unemployment rate forecast to stay put at 5.5%. German inflation is also expected to show an increase from 3.9% to 4.2% as companies feel the pinch of higher prices.

Evergrande default fears could still weigh on the euro

Evergrande Group’s electric-car business plunged in Hong Kong trading after it warned of a “serious shortage of funds” and scrapped plans to list shares in Shanghai.

Shares of China Evergrande New Energy Vehicle Group dropped by as much as 26% in early trading, adding to their decline this year which now sits at 94%. The company has lost than $84 billion in market cap from its peak in April.

In a statement on Friday, Evergrande NEV said it has suspended paying some of its operating expenses and some suppliers have suspended work. The statement confirmed Bloomberg’s report that the company had missed salary payments to some workers.

Concerns that China’s second-largest property developer could default on its $305 billion of debt has sparked contagion fears for Asian businesses and financial markets. The People’s Bank of China has injected 100 billion yuan ($15.47 billion) into the financial system, adding to the net 320 billion yuan last week, which is the most since January.

Some local governments in China have also set up special custodian accounts for Evergrande property projects to protect funds earmarked for housing projects.

Germany’s export economy relies on China and could be hit by a cascading default in the country. Investors will be following the headlines closely this week after markets recovered from a sell-off into Wednesday.

Ratings agency Fitch sought to soothe fears with its latest report, saying:

“The impact from a China Evergrande Group (CC) credit event on rated Chinese construction issuers will be manageable because they have limited exposure to Evergrande.”

In the UK, Boris Johnson was set to call in the military to help with fuel deliveries as petrol stations run dry from recent panic buying.

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