Pound euro (GBP/EUR) wavers following downbeat UK retail data
(Updated 15:35, 26/06/24) The pound euro (GBP/EUR) exchange rate is trading without a clear direction this afternoon following the Confederation of British Industry’s (CBI) latest retail sales data.
The CBI’s retail sales gauge declined more than forecast in June, tumbling to -24, rather than softening to a more modest market projection of 1. Following last month’s notable rise in retail activity, a return to lacklustre consumer conditions weighs on the pound (GBP) as the session nears an end.
Alpesh Paleja, Interim Deputy Chief Economist at the CBI, said:
‘Last month’s nascent recovery in sales proved to be short-lived, with retailers reporting a faster-than-anticipated decline this month.
It’s clear that households are still struggling with the legacies of the cost-of-living crisis, with the level of prices still historically high in some areas.’
Meanwhile, the euro (EUR) continues to slump against some of its stronger rivals following this morning’s downbeat German consumer confidence data. In addition to this, a strengthening US dollar (USD) further pressures the common currency, due to the pairing’s negative trading correlation.
Looking ahead, could an improving economic sentiment in the Eurozone lend EUR some support tomorrow?
At the time of writing, GBP/EUR is trading at €1.1825, virtually unchanged from this morning’s opening levels.
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Pound euro (GBP/EUR) exchange rate fluctuates as German economic pessimism persists
The pound euro (GBP/EUR) exchange rate is trapped in a narrow range this morning despite renewed signs of German economic pessimism.
At the time of writing the GBP/EUR exchange rate is trading at around €1.1839, virtually unchanged from this morning’s opening rate.
Euro (EUR) stymied by weak German confidence
The euro (EUR) facing headwinds this morning following the latest German consumer confidence data.
The GfK consumer climate indicator for Germany unexpectedly fell to -21.8 in July, dipping below the previous month’s downwardly revised reading of -21 and missing market projections of an increase to -18.9.
Analysts noted a fall in both income expectations and economic prospects, while the propensity to save money in place of spending spiked.
Carsten Brezki, Global Head of Macro at ING, said:
‘Despite surging real wages and probably the strongest wage growth in a decade this year, policy uncertainty and sluggish economic growth are still denting consumers’ willingness to spend. If there is any positive impact from the Euro 2024 at all, it will have to come from foreign football supporters rather than German consumers.’
Elsewhere, ongoing political uncertainty, stemming from France’s snap-election further hampers EUR exchange rates. As the far-right National Rally climbs higher in the polls, markets are expressing concern over the future of the common currency.
Pound (GBP) subdued amid data lull
The pound (GBP) is trading without a clear direction this morning amid a lack of fresh UK releases.
With UK data in short supply, a diverging Bank of England (BoE) monetary policy outlook leaves Sterling largely muted against its rivals, amid growing BoE interest rate cut uncertainty.
Following last week’s cooling UK consumer price index (CPI), the central bank’s decision to keep interest rates at a sixteen-year high has placed the BoE’s monetary policy outlook under close scrutiny.
While a majority of economists expect to see monetary loosening occur in April, a rising number of analysts have dialled back their rate cut expectations to September, with such pushback seemingly buoying GBP this morning.
Suren Thiru, economics director at The Institute of Chartered Accountants in England and Wales, said:
‘Given that the U.K. has moved onto a milder inflationary trajectory, rate setters remain too circumspect over the likelihood of loosening policy, risking unnecessarily impeding the U.K.’s growth prospects.’
Elsewhere, pre-election anxiety in the UK seemingly weighs on GBP, offsetting the increasingly risk-sensitive currency’s upside potential amid an upbeat market sentiment.
Pound euro exchange rate forecast: UK retail data in focus
Looking ahead, the Confederation of British Industry’s (CBI) monthly retail sales balance for June is due for release today. After leaping to a two-and-a-half year high last month, the index is due to retreat once again, falling to 1 later this morning. Should the data print as expected, slumping retail activity may weigh on Sterling later this morning.
For the euro, a speech from the European Central Bank’s (ECB) Chief Economist Philip Lane could drive EUR movement this afternoon. Any dovish commentary will likely deter investor interest in the common currency, while talks of a more restrictive stance from the central bank may serve to lend the euro some modest support.