- Euro gains recorded against GBP after rising Irish confidence score – Appreciation for single currency despite German letdown
- Pound tumbled after recession risks heightened – NIESR predicts technical recession
- ECB interest rate decision due tomorrow – Speech expected from UK Chancellor Hammond
The Euro managed to rise against the Pound by a considerable amount over Wednesday afternoon, thanks mainly to the devaluation of Sterling on fears of a recession hitting the UK next year. Positive Eurozone news has focused on the Irish consumer confidence figure, which has risen from 99.6 to 102.7 on the month.
In the UK, losses have been caused by the NIESR GDP estimate for Q3, which has been revised down and included fears that a technical recession, indicating two quarters of contraction, may be seen before the end of 2017.
Looking ahead, tomorrow’s major Eurozone news will concern the freeze-forecast European Central Bank (ECB) interest rate decision, while from the UK, a speech is expected over the afternoon from relatively new Chancellor Philip Hammond.
(Last updated September 7th 2016)
The Euro opened trading on Wednesday in a depleted state, having been weakened by the result of Germany’s early drop in industrial production in July from 1.1% to -1.5%.
The Pound has been in a state of similarly mixed appeal, with investor uncertainty about upcoming UK ecostats doing little to facilitate overall gains for the UK currency. The latest news out of the UK has concerned the Halifax house price index for August, which fell from 8.4% to 6.9% on the year and from -1% to -0.2% on the month.
The next data to watch out for will come from the UK, when the pessimistically-predicted July industrial and manufacturing production results are due. From the Eurozone, the next news will concern Greece’s balance of trade for July, which is expected to show a sizable deficit expansion.
(Last updated September 7th, 2016)
The Pound was in a more fragmented state than the Euro yesterday, with the only real UK domestic data sparking concerns about how the economy was faring post-‘Brexit’.
Eurozone Economic News: Euro Investors put off by Eurozone GDP Slowdown in Q2
The Euro spent most of Tuesday’s trading in a depleted state, with significant losses being recorded against most peers barring the then-soft Indian Rupee (EUR INR).
This lack of demand for the Euro was primarily caused by the outcome of Tuesday morning’s third estimates for the Q2 GDP growth rate of the overall Eurozone, which fell in line with forecasts on the quarter and the year.
Other Eurozone data was less damaging, with the German construction PMI for August remaining at 51.6 against predictions of a decline, while the Eurozone August retail PMI actually beat forecasts by climbing from a contractionary 48.9 to a growth figure of 51.
Commenting on the GDP news, ING Financial Markets Senior Eurozone Economist Bert Colijn said;
‘Consumption could recover somewhat, but no miracles can be expected with weakening employment growth. It therefore seems likely that growth will slow down somewhat further in the months ahead’.
Pound Euro (GBP EUR) Exchange Rate Uncertainty Caused by Falling UK Sales on Tuesday
The Pound made a historic rise against the US Dollar (GBP USD) to 1.34 during Tuesday afternoon; this represented the best exchange rate since the EU Referendum aftermath.
Against the Euro (GBP EUR), the Pound spiked to almost 1.20, which was still a far cry from the 1.30 figure seen on the eve of the Referendum.
UK domestic data was limited to the British Retail Consortium like-for-like sales result on the year for August, which fell from 1.1% to -0.9%.
This raised further concerns about how the UK economy was actually performing in the wake of ‘Brexit’, given the myriad data on display since July onwards.
Future EUR GBP Forecast: German Industrial Data and UK Production Stats due Today
The near-future will bring the announcement of Germany’s industrial production result for July, which is forecast to dip from 0.8% to 0.4%.
The rest of the day’s major data will be sourced from the UK, starting with the manufacturing and industrial production results for July; these are both expected to fall on the month and year.
Following on from this in the afternoon will be the National Institute of Economic and Social Research (NIESR) GDP estimate for Q3, which is forecast to worsen from 0.3% to 0.1%.
Recent EUR, GBP Exchange Rates
At the time of writing, the Euro Pound (EUR GBP) exchange rate was trending in the region of 0.8362 and the Pound Euro (GBP EUR) exchange rate was trending in the region of 1.1958.