Pound euro exchange rate reaches two-and-a-half year high following UK retail sales
The pound euro (GBP/EUR) exchange rate is trading near a two-and-a-half year high reached earlier this morning following the publication of the UK’s latest retail sales data.
At the time of writing, GBP/EUR is trading at around €1.2037, up almost 0.2% from this morning’s opening levels.
Pound (GBP) rallies in the wake of retail data
The pound (GBP) is manging to firm against the majority of its peers this morning following the publication of the UK’s latest retail sales data for September.
Retail sales unexpectedly rose last month, falling from a previous reading of 1% to 0.3%, ahead of an expected 0.3% contraction.
The increase was primarily put down to a boost in electronics sales and back-to-school shopping, and suggested that the UK economy is stronger than expected.
Neil Birrell, Chief Investment Oficer at Premier Miton Investors commented:
‘The wet weather didn’t deter the British public spending their money in September, as shown by stronger than expected retail sales. The consumer sector is very important within the economy and even though this is just one month’s data, it suggests the economy is more robust than was thought.’
Offering further support to GBP exchange rates this morning is the UK’s latest consumer confidence data for September, published by Deloitte UK.
Despite concerns over the UK Chancellor’s upcoming Autumn Budget, domestic consumer confidence has reached its highest level in five years, further buoying Sterling sentiment this morning.
Euro (EUR) undermined by ECB rate cut bets
The euro (EUR) is struggling to garner investor attention this morning in the wake of the European Central Bank’s (ECB) latest interest rate decision, published yesterday afternoon.
The ECB delivered a widely expected 25 basis point interest rate cut on Thursday which dented the single currency.
However, dovish forward guidance in the accompanying press release from ECB President Christine Lagarde saw EUR exchange rates fall further, as she expressed that the Bloc’s disinflationary process is ‘on track’.
With a lack of any economic data releases scheduled for release today, the euro is likely to remain on the back foot as markets continue to digest the latest ECB’s monetary policy meeting.
Pound euro exchange rate forecast: market mood to drive pairing?
Looking ahead, the primary catalyst of movement for the pound euro exchange rate looking at next the start of week will likely be market appetite for risk, amid a lack of both UK and Eurozone economic data.
As a safe-haven currency, any downbeat trade could see a dip in GBP/EUR. However, on the back of the pound’s increasingly risk-sensitive nature, a shift to cheery trading conditions could see GBP/EUR firm.