Rising German Consumer Confidence Not Enough to Dent GBP/EUR Exchange Rate
The Pound to Euro (GBP/EUR) exchange rate rallied in spite of a stronger-than-expected Germany GfK consumer confidence index reading.
Although the index picked up from -12.7 to -6.2 for April this was not enough to offer the Euro (EUR) any particular rallying point this morning.
Confidence in the outlook of the Eurozone economy remained muted as EU leaders met to discuss the potential ban of Covid-19 vaccine exports, highlighting the threat still facing Europe.
With pandemic-based disruption looking set to persist for some time yet to come, especially as cases across the Eurozone have recently risen, the single currency proved lacking in upside potential at this stage.
Lack of CBI Distributive Trades Index Improvement Fails to Weigh on Pound
A disappointing UK CBI distributive trades index also failed to put much pressure on Pound Sterling (GBP), meanwhile.
Even though the index failed to show an improvement on the month, instead holding steady at -45, this was not enough to drag the GBP/EUR exchange rate down at this stage.
As demand for the Pound had proved limited over the course of the week this limited the potential for any further selling pressure at this stage.
Nevertheless, the lack of uptick in the index suggests that the UK retail sector remained under a degree of pressure at the end of the first quarter.
Positive UK Retail Sales Data Set to Shore up Pound Euro Exchange Rate
On the other hand, the mood towards the Pound could improve on Friday with the release of February’s UK retail sales data.
Forecasts point towards a solid rebound in sales volumes on the month, with a 2.1% monthly uptick having the potential to reverse some of January’s -8.2% slump.
A positive showing here would suggest that UK consumers took a more optimistic view last month, in spite of the ongoing national lockdown and Covid-19 concerns.
As stronger levels of retail spending have previously helped to shore up economic activity any improvement here could offer the Pound to Euro exchange rate a fresh leg up.
Euro Exchange Rates Look for Support on Stronger German Business Sentiment
However, the Euro may also find support ahead of the weekend as long as March’s Germany IFO business sentiment survey proves encouraging.
Investors anticipate another modest month of improvement for the climate index, suggesting that worries over the health of the Eurozone’s powerhouse economy remain limited.
An increased expectations index would also offer cause for confidence in the single currency, with the risk of a negative first quarter gross domestic product reading likely to diminish.
Even so, if the general sense of market risk appetite begins to recover in the near term this may keep the Euro under a degree of pressure.
Any fresh tensions over the EU’s handling of Covid-19 vaccines could equally help to keep the Pound to Euro exchange rate on a positive footing.