Nine-Month High in Retail Sales Growth Fails to Bring GBP/EUR Exchange Rate Gains
UPDATE 14:16 BST: The Pound (GBP) has continued to trade in a narrow range against the Euro (EUR) this afternoon, close to the weekly low of the interbank rate at €1.13.
The current lack of interest in the Pound comes despite supportive Confederation of British Industry (CBI) data, which has shown some impressive retail sales growth.
June’s distributive trades reading has shown the fastest pace of acceleration since September 2017, rising from 11 points to 32.
Pound Sterling’s continued poor performance is likely down to Brexit fears, following a call from UK businesses for clarity and progress in discussions.
The number of companies speaking out as the possibility of no deal has grown. March 2019 is not far away when thinking about the adjustments firms like Airbus have to make to be ready for a no deal scenario. #Airbus pic.twitter.com/JxBpMT7sUz
— CBI (@CBItweets) June 22, 2018
BoE Financial Stability Report Fails to Break GBP/EUR Exchange Rate Deadlock
UPDATE 10:57 BST: Pound Sterling (GBP) has held close to opening levels against the Euro (EUR) today, following the release of a Bank of England (BoE) report.
The latest BoE Financial Stability Report has painted a broadly positive picture of the UK economy at present, although background risks remain.
On the plus side, BoE policymakers believe that the UK’s banks will be able to survive a ‘disorderly Brexit’.
That said, the lack of progress and clarity in Brexit talks has been a negative factor, with the report warning that:
‘The biggest remaining risks of disruption are where action is needed by both UK and EU authorities.’
Optimistic Outlook in BoE Report could Push Pound to Euro (GBP/EUR) Exchange Rate Higher
Today’s Bank of England (BoE) report has the potential to boost the Pound to Euro exchange rate (GBP/EUR), but before this comes out it is looking at yesterday’s pairing movements.
Pound Sterling was static against the Euro for most of Tuesday, partly down to a limited amount of UK economic data and partly because of BoE news.
Speaking before taking over from policymaker Ian McCafferty, new BoE member Jonathan Haskel surprised GBP traders with some dovish talk as he warned against a faster pace of interest rate hikes.
An August interest rate hike hasn’t been written off after Haskel’s comments, however, as the more hawkish McCafferty will still be voting at August’s rate meeting.
Euro to Pound (EUR/GBP) Stagnation Caused by Fears of Eurozone Disunity
There was a similar deficit of Eurozone data yesterday, which prevented any real EUR/GBP exchange rate gains.
Eurozone news was unsettling, with signs that there might be sustained opposition to French and German plans to form a cohesive Eurozone-wide common budget.
Pound Sterling to Euro Exchange Rate Forecast: Will BoE Report Boost GBP/EUR?
Today’s main UK economic event will be the release of the Bank of England’s (BoE) financial stability report, due out this morning.
As well as providing a snapshot of the current state of the UK economy, the report also includes a forecast on what could drive it in the months ahead.
The report has the potential to trigger a Pound to Euro (GBP/EUR) exchange rate rally, if it shows that the British economy is stable and liable to strengthen further over the rest of 2018.
This isn’t guaranteed, however, as the report might reflect BoE policymaker concerns about ongoing Brexit talks.
BoE Governor Mark Carney will be speaking alongside the release of the report and his tone, whether cautious or confident, could decide daily GBP/EUR exchange rate movement.
To a lesser extent, the Pound might be slightly weakened by today’s later Confederation of British Industry (CBI) trades data, if it shows a forecast-matching dip from 11 points to 10.
Chance of Euro to Pound (EUR/GBP) Exchange Rate Losses on Lower Italian Confidence
Today is likely to be relatively quiet for Euro (EUR) traders, which could leave the Pound (GBP) as the dominant partner in the currency pairing.
The morning’s Eurozone news might support a Pound to Euro (GBP/EUR) exchange rate rise, as levels of Italian business and consumer confidence are predicted to have fallen in June.