GBP/EUR Exchange Rate Rangebound as UK Housing Market Suffers as Stamp Duty Holiday Nears End
The Pound to Euro exchange rate held steady today, with the pairing currently fluctuating around €1.133.
Sterling is rangebound against the single currency today despite this morning’s publication of January’s Nationwide Housing Prices. According to the report, house prices dipped by -0.3% last month.
Robert Gardener, Nationwide’s chief economist, also warned that the housing market could slow down in the months ahead:
‘Looking ahead, shifts in housing preferences are likely to continue to provide some support for the market. However, if the stamp duty holiday ends as scheduled, and labour market conditions continue to weaken as most analysts expect, housing market activity is likely to slow, perhaps sharply, in the coming months.’
In UK coronavirus news, daily cases are down by -3,588 against last week while those who are in hospital remains high at 34,783.
However, 13.9% have received at least one dose of the Covid-19 vaccine. This has given a boost hopes that the Government is still on target to vaccinate those in the four priority categories by mid-February.
Euro Struggles as the Eurozone’s GDP Falls in the Final Quarter of Last Year
The Euro struggled against Sterling today following the publication of the latest German Retail Sales figures, which fell by a worse-than-expected -9.6% in December.
Consequently, EUR traders have become increasingly concerned about the state of the Eurozone’s largest economy.
VP Bank analyst Thomas Gitzel commented:
‘The containment measures left massive scars in December. Compared to November, sales dropped by an alarming extent.’
In Eurozone economic news, today saw the release of the flash Gross Domestic Product (GDP) data for the fourth quarter, which fell by -0.7% quarter-on-quarter.
Today also saw the year-on-year figure which also slumped by -5.1%.
As a result, EUR traders are becoming increasingly pessimistic about the outlook for the Eurozone’s economy.
Could Falling Eurozone Inflation Drag Down the Single Currency?
Euro investors will be awaiting tomorrow’s release of the flash Eurozone Consumer Price Index.
If inflation dips in line with forecasts, then we could see concerns grow over the European Central Bank’s (ECB) next policy move.
Tomorrow will also see the final German PMI Composite figure. If this points to a negative outlook for the Eurozone’s largest economy, then EUR would suffer.
Pound traders will be eyeing tomorrow’s release of January’s UK Services PMI. If this is revised downward, we could see Sterling fall.
The Pound to Euro exchange rate will be mainly driven by the UK’s Covid-19 situation. Any signs that the UK’s vaccination programme is on the road to success would be GBP-positive.