Pound euro (GBP/EUR) exchange rate muted following lacklustre German data
The pound euro (GBP/EUR) exchange rate is trapped in a narrow range this morning following the publication of weaker-than-expected German data.
At the time of writing, GBP/EUR is trading at around €1.1814, virtually unchanged from this morning’s opening levels.
Euro (EUR) undermined by decline in German business morale
The euro (EUR) is struggling to attract investor attention this morning following the publication of Germany’s latest Ifo business climate survey.
June’s index reported a surprising downturn in business morale as it fell from a previous reading of 89.3 down to 88.6, below market expectations of an increase to 89.7.
An exert from the index read:
‘Sentiment has deteriorated at companies in Germany. This was due to more pessimistic expectations. However, the assessments of the current situation remained unchanged. The German economy is having difficulty overcoming stagnation.’
Signs of deteriorating business confidence in the Eurozone’s largest economy alongside current political tensions in France have both weighed on EUR sentient this morning.
The latest polls continue to show Marine Le Pen’s far right party in the lead just a week before the first stage of France’s parliamentary election. Concerns over which are likely to remain a headwind for the euro this week.
Pound (GBP) quiet amid lull in notable data
The pound (GBP) is trading sideways against the majority of its peers amid a scarcity of high-impact UK data this morning.
In the interim, GBP investors may look ahead to the latest Confederation of British Industry (CBI) industrial trends survey, scheduled for release later this morning.
As the data is forecast to report another negative reading in June, will this weigh on Sterling sentiment through the second half of today’s session.
Pound euro exchange rate forecast: German consumer confidence in the spotlight?
Looking ahead, the primary driver of movement for the pound euro exchange rate during the first half of this week will likely be Germany’s latest GFK consumer confidence index for July.
Scheduled for release on Wednesday, the survey is expected to show another increase in consumer confidence in Germany, with the index forecast to rise from -20.9 to -19.8.
This would mark the most positive consumer sentiment reading since April 2022, this could lend the common currency some modest support during mid-week trade.
However, in the midst of France’s upcoming general election, any potential EUR gains will likely remain limited.
Turning to the pound, as significant UK data will remain thin on the ground the first half of this week, GBP investors may turn their attention to some mid-tier domestic data, scheduled for release on Wednesday.
The UK’s latest CBI distributive trades are forecast to report a slight slowdown in retail activity in June, which could infuse volatility in GBP exchange rates in the middle of this week.