Pound euro exchange rate trades near 24-month high following upbeat UK data
The pound euro (GBP/EUR) exchange rate is teetering near a two-year high struck this morning following the publication of some better-than-expected UK retail sales data.
At the time of writing, GBP/EUR is trading at around €1.1911, virtually unchanged from this morning’s opening levels.
Pound (GBP) supported by UK retail sales
The pound (GBP) is being underpinned by this morning’s latest economic data release, as the publication of the UK’s latest retail sales index has seen Sterling trade at multi year highs against several of its counterparts.
The reading, released earlier this morning, confirmed a larger than expected rise in consumer spending in August, with the data rising from 0.7% to 1%, well above an expected 0.4% increase.
ONS Chief Economist Grant Fitzner commented:
‘Retail sales rose in August as warmer weather and end of season promotions helped to boost sales, most notably for clothing and food shops. Supermarkets, in particular, contributed to the largest annual rise for food sales since the summer of 2021. Looking at the broader picture, retail sales have also increased across the three month and annual period, following strong growth from online retailers. However, sales overall remain slightly below their pre-pandemic level.’
This has buoyed Sterling sentiment further this week, following a cooler-than-expected UK CPI reading on Wednesday and the Bank of England’s (BoE) dovish interest rate hold on Thursday.
Euro (EUR) muted amid data-light morning
The euro (EUR) is struggling to garner investor attention this morning as a lack of domestic data sees the single currency struggle to find a clear trajectory.
EUR investors may also be reluctant to place any aggressive bets ahead of a speech from European Central Bank (ECB) President Christine Lagarde.
Should Lagarde include any dovish commentary as part of her afternoon address, EUR exchange rates could close the week on the back foot.
Pound euro exchange rate forecast: PMIs in the spotlight?
Looking ahead, the primary catalyst of movement for the pound euro exchange rate at the start of next week will likely be the publication of both the UK’s and the Eurozone’s preliminary PMIs for September.
Scheduled for release on Monday, will another upbeat UK PMI reading be enough to lift Sterling at the start of next week?
Turning to the euro, should the Eurozone’s latest indices confirm another mixed reading, the single currency could start the week dipping against its peers.
On Tuesday, the euro could extend its downward trajectory should Germany’s latest IFO business climate remain near seven-month lows.