- Single currency slumps on poor German printings – Greek unemployment ticks down
- Pound Sterling lifted by mix of UK news – GBP dips then rises to 1.17 against EUR
- Banks pledge to keep London relevant in financial world – Domestic data for UK less supportive
- German trade balance stats due shortly – UK to offer trade deficit data as well
The Euro Pound Sterling exchange rate was able to strengthen on Thursday as Eurozone ecostats disappointed and investors took a break from the week’s earlier Sterling sell off.
However, with the latest UK economic reports indicating that the British economy slowed even before the EU referendum vote was held, the Pound is unlikely to maintain its slight show of strength for long. Economists are expecting growth in the UK’s three primary sectors – construction, manufacturing and services – to slow markedly over the next few months.
That being said, if the political situation in the UK calms, Sterling could firm prior to the formal beginning of the nation’s Brexit negotiations.
Eurozone Economic News: German Production Slide sees Euro Drop Off
The Euro has taken a dive against its competitors recently, with a drop off in confidence for the single currency stemming from yesterday’s early German industrial production stats for May.
On the month, a drop from 0.5% to -1.3% was recorded, while on the year, a similar-sized decline from 0.8% to -0.4% was seen. In both cases, forecasts had been for a more positive outcome.
In other news, the European Central Bank (ECB) has also contributed towards the low appeal of the Euro by stating that the impacts of ‘Brexit’ may be ‘difficult to anticipate’ and ‘significant’.
Having perused the ECB’s latest account, FT Bureau Chief in Frankfurt Clair Jones said:
‘The account of the early June Vienna meeting also indicated that officials around the single currency area were relying on a rate hike in the US and their purchases of corporate bonds alongside fresh injections of cheap central bank cash to boost growth’.
Pound Sterling Rallies despite Uncertain Mix of Domestic Data
The Pound was in extremely high demand yesterday, although this was an irregular occurrence given how much negativity has been surrounding the UK economy recently.
In addition to the recent spate of trading property funds closing at an alarming rate, the Lloyds business barometer on Thursday morning showed a major decline from 32 to 6.
On a more positive note, the Pound was given some midday support by a commitment from investment banks such as Goldman Sachs and JPMorgan to ensure that London remained on firm financial footing.
Future EUR, GBP Forecast: Balance of Trade Results to Cause Most Pairing Movement Today
As the week draws to a close, both the Eurozone and the UK will be releasing balance of trade stats today, though in the former case, the only notable variant will come from Germany.
As of writing, expectations have been for a reduction of the current budget surplus, from 25.6bn to 20.9bn.
A little later on, the UK will release its trade balance stats for the same month and in an inverse situation, the UK’s current trade deficit of -£3.294bn is forecast to expand to -£3.8bn.
Recent EUR, GBP Exchange Rates
The Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.8505 and the Pound Sterling to Euro (GBP/EUR) exchange rate has been trending in the region of 1.1759 recently.