Pound Euro (GBP/EUR) Exchange Rate Wavers on UK Sales, Omicron Fears and German Business Morale
The Pound Euro (GBP/EUR) exchange rate is fluctuating today, as GBP investors weigh up strong retail sales data on the one hand and the UK’s worrying Covid situation on the other.
EUR investors, meanwhile, are likely feeling troubled by the sixth consecutive monthly drop in German business morale.
Pound (GBP) Mixed despite Strong Sales Data
The Pound (GBP) is wavering against the Euro (EUR) today as strong sales data is offset by ongoing concerns over the Omicron variant.
UK retail sales rose by 1.4% in November, beating forecasts of a 0.8% rise. The strong sales activity came amid Black Friday and festive trading, with many shoppers buying Christmas gifts in advance to avoid higher prices and shortages. The rise means that retail sales are now 7.2% higher than their pre-pandemic levels.
In addition, the Office for National Statistics (ONS) upwardly revised October’s figure from 0.8% to 1.1%.
However, concerns over the Omicron variant continue to offset the upside.
Wales has announced plans to introduce new Covid restrictions on 27 December, while Scotland has issued new guidance to businesses to limit the spread of the virus.
Meanwhile, the government has so far ruled out any extra support for struggling industries, arguing that appropriate support is still in place.
So while the sales data present a positive picture of the UK’s recovery over the last two months, GBP investors are worried that the next two won’t be so rosy.
Euro (EUR) Muted amid Drop in German Business Morale
Meanwhile, the Euro is struggling to press the advantage against the Pound today after business morale in Germany fell for a sixth consecutive month to hit its lowest level since February.
Recent restrictions brought in to curb the fourth wave of Covid in the country hammered confidence in the services sector, while ongoing supply chain disruption also weighs on business sentiment.
Movement also seems limited as markets take a breather following the interest rate decisions from the Federal Reserve, Bank of England (BoE) and European Central Bank (ECB) this week.
While the Fed and the BoE took much more hawkish stances than the ECB, the Euro has showed resilience. This is perhaps because traders agree with the ECB’s cautious and flexible approach.
Pound Euro Exchange Rate Forecast: Omicron in Focus
As the session continues, we may see the Pound Euro pair continue to waver.
News about the spread of Omicron in the UK and its impact on the country’s economic recovery will likely keep playing on investors’ minds. Any new developments – either positive or negative – will probably have a notable impact on GBP/EUR.