GBP/EUR Exchange Rate Flat Following Eurozone Retail Sales
The Pound Sterling to Euro (GBP/EUR) exchange rate is trending in a narrow range this morning as economists react to the Eurozone’s latest retail sales figures.
At the time of writing the GBP/EUR exchange rate is trading at around €1.1144, leaving the pairing virtually unchanged from this morning’s opening rate.
Euro (EUR) Subdued as Eurozone Retail Sales Miss
The Euro (EUR) is rangebound against the Pound (GBP) and the majority of its other peers this morning after the Eurozone’s retail sales figures missed expectations
According to data published by European statistics agency, Eurostat, sales growth declined for a second consecutive month in May, contracting from an upwardly revised -0.1% to -0.3%, missing forecasts of a rebound to 0.3%.
Disappointing news on #Eurozone as #retail sales volumes dipped 0.3% month-on-month in May, only partly compensated by April drop being cut to 0.1% m/m from previously reported 0.4% m/m. Sales up 1.3% y/y in May. #consumer spending needs to hold up to limit Eurozone downturn
— Howard Archer (@HowardArcherUK) July 4, 2019
Sales have now failed to expand since February, a worrying prospect for EUR investors given the rebound in Eurozone growth in the first quarter of 2019 was largely driven by a rise in consumer spending.
This is also likely to increase the pressure on the European Central Bank (ECB) to introduce fresh stimulus into the Eurozone, the prospect of which has weighed on the Euro in recent weeks.
Pound (GBP) Muted as Political Uncertainty Weighs
At the same time, the Pound (GBP) is struggling to find momentum today as a lull in economic data turns the focus back towards the Conservative leadership race.
Unsurprisingly, Brexit has dominated the conversation surrounding the contest with Boris Johnson and Jeremy Hunt eager to promote their Brexit credentials and persuade Tory members that they are the right person to lead the UK out of the EU.
However, in recent days both candidates have appeared to hardened their stances on Brexit, with the focus turning almost entirely towards how they would handle a no-deal Brexit, rather on how they would avoid such a scenario.
This unsurprisingly has unnerved some GBP investors and is limiting the appeal of the Pound this morning.
GBP/EUR Exchange Rate Forecast: Will a Slide in House Prices Drag on Sterling?
Looking ahead to the end of this week’s session, the Pound Euro (GBP/EUR) exchange rate may weaken again following the publication of Halifax’s UK House Price Index.
Economists forecast that this will show that house prices fell last month as heightened Brexit anxiety continues to drag on the UK housing market.
Meanwhile, the absence of any notable Eurozone data is likely to lead EUR investors to turn their focus towards next week’s session and the release of Germany’s latest Industrial Production figures.
This is likely to result in the Euro opening next week on a sour note as analysts expect factory output in the Eurozone’s largest economy to have contracted again in May, increasing the risks that Germany economy will have contracted in the second quarter.