Pound Euro (GBP/EUR) Exchange Rate Dips amid Poor UK Boxing Day Retail Data
The Pound Euro (GBP/EUR) exchange rate is weakening this morning, amid downbeat data for the UK’s retail sector.
At the time of writing, GBP/EUR is trading at around €1.1503, a drop of around 0.2% from the morning’s opening levels.
Pound (GBP) Narrows amid Bleak Boxing Day Retail Footfall
The Pound (GBP) is wavering this morning, following news of underwhelming Boxing Day retail footfall.
The figures found that on a week by week basis, footfall was lower by 32.9% on average across the UK’s retail sector. As such, consumer spending could be showing signs of a worrying decline as the cost-of-living crisis intensifies.
Jenni Matthews, Marketing and Insights Director at MRI Software, commented:
‘We also can’t forget that many people may be tightening their purse strings given the cost of living status, or may still be spending time with their families on Boxing Day and not be heading out to stores and destinations until later in the week.’
However, the Pound’s increasingly risk-sensitive nature may be offsetting any losses, amid an upbeat market mood.
Euro (EUR) Edges Higher amid Upbeat Market Mood
The Euro (EUR) is managing to tick higher this morning, keeping it steady at multi-month highs against some peers.
Although the long Christmas weekend has seen a patch of thin trading conditions, EUR is taking advantage of a weak US Dollar (USD). As the pairing is inversely correlated, the common currency is enjoying some support as USD remains weak.
However, the common currency’s gains are likely being restricted by a lack of data releases in today’s session.
Although, with markets pricing in imminent interest rate cuts from the Federal Reserve, EUR could remain afloat during the week.
Jan Szilagyi, CEO of Toggle AI, commented:
‘I don’t love the term, but if you were to describe what is happening it’s definitely Goldilocks for the market. Inflation’s coming down, the economy is still chugging along, and the hiking cycle’s over. On all of these macro trends, the rally has been justified.’
GBP/EUR Exchange Rate Forecast: Risk Appetite to Mute Pound?
Looking ahead for the Pound, data releases are few and far between as we move into next year. Because of this, Sterling is likely to remain vulnerable to shifts in the market mood.
As an increasingly risk-sensitive currency, the Pound is more sensitive to these shifts in risk appetite. If trading conditions improve, Sterling could climb against safer assets. However, should they remain bearish, GBP exchange rates could remain tepid.
The story is similar for the Euro, which is also due to see little in the way of impactful economic data. Because of this, the core catalyst of movement may be tomorrow’s US initial jobless claims.
If an uptick in American jobless claims occurs, the Euro could rally as the ‘Greenback’ may weaken. This is down to their negative correlation, which sees either currency strengthen due to an inverse correlation.