The Euro Pound (EUR/GBP) exchange rate has weakened this morning after retail sales rose more than expected in the UK.
The EUR/GBP exchange rate is currently trading around the £0.8611 level as the Euro limits losses on the back of the latest flash PMI data from the Eurozone.
Euro (EUR) Limits Losses on Flash Eurozone PMI
The Euro has weakened against the Pound this morning as Sterling finds support in the latest retail sales data from the UK.
However limiting the Euro’s losses today has been the flash PMI data from the Eurozone for May which has shown the services sector rose to 55.1, more than the 52.6 forecast.
Chris Williamson, Chief Business Economist at HIS Markit commented on the flash data saying:
‘Demand for goods and services is surging at the sharpest rate for 15 years across the Eurozone as the region continues to reopen from Covid-related restrictions. Growth would have been even stronger had it not been for record supply chain delays and difficulties restarting businesses quickly enough to meet demand, especially in terms of re-hiring.’
The Euro continues to find support in the Eurozone’s ramped up coronavirus vaccine rollout as the bloc hopes to offer a dose of the vaccination the every adult by the end of July.
Pound (GBP) Supported by UK Retail Sales Data
The Pound has found itself supported against the Euro this morning following the latest retail sales from the UK for April.
Retail sales across the UK surged by 9.2% in April, faster than expected, official data from the Office for National Statistics has shown.
Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown, commented on the jump in retail sales saying:
‘Retailers were in dire need of a spring sales boost after a long dark winter of lockdowns and the grand reopening delivered just that.’
‘As shoppers had the novelty of spending in physical rather than virtual stores, total retail sales for the amount spent and quality bought was up 10% compared to pre-pandemic February 2020 levels, showing clear pent up demand.’
More so, the latest flash PMI data from the UK for May has shown that the UK’s private sector expanded at its fastest pace in two decades.
Duncan Brock, Group Director at CIPS, commented on the flash PMI’s:
‘Private sector businesses had their best month for two decades with an explosive return to activity and at the sharpest rate since the survey began in 1998. A strong influx of new work from domestic and export customers signalled the end of a Covid-suppressed marketplace and job creation also expanded at the fastest pace since June 2014.’
Euro Pound Exchange Rate Outlook: German GDP in Focus
Heading into next week, Euro traders will look towards the final GDP growth rate for Q1 which is forecast to show the German economy contracted by 1.7% as the country dealt with the third wave of coronavirus.
A quieter economic week for the UK will see Sterling investors continue to focus on any further coronavirus developments, a surge of Indian variant coronavirus cases would cause investors to become more concerned over the UK’s lockdown easing deadline.