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Euro Pound (EUR/GBP) Exchange Rate Dips as German Retail Sales Fall Significantly Below Forecasts

Euro Pound exchange rate forecast

EUR/GBP Exchange Rate Falls as German Lockdowns Limit Retail Sales in April

The Euro Pound exchange rate fell by -0.2% today despite German retail sales falling more than expected in April. The pairing is currently trading around £0.86.

The Euro fell today dafter April’s lockdown restrictions in Germany limited the nation’s retail sales, which declined by 5.5% on the month following March’s 7.7% increase.

Claus Vistesen and Mel Debono, chief eurozone economist and senior European economist at Pantheon Macroeconomics, commented on the data:

‘This isn’t pretty, but it is consistent with weakness in elsewhere at the start of Q2 – mainly in France – in response to new virus restrictions.

‘[I]t is consistent with mean reversion after an 11.2% gain through February and March. Remember also that outliers in the German retail sales data very often are revised; we suspect the April headline will too.’

Germany’s retail sales are however expected to rebound significantly last month and in June.

Thanks to Europe’s accelerated rollout of Covid-19 vaccinations, the outlook for the bloc’s economy continues to improve.

But this has failed to uplift the EUR/GBP exchange rate as the Pound continues to strengthen.  

Eurozone inflation has also risen sharply and has exceeded the European Central Bank’s (ECB) targets as key economies throughout Europe reopen from Covid-19 restrictions.

Pound (GBP) Exchange Rate Edges Higher as UK Lockdown Easing on Track for June

The Pound (GBP) rose against the single currency today after Prime Minister Boris Johnson confirmed that there were no signs that there should be a delay to lifting lockdown rules on 21 June.

According to NHS reports, three-quarter of adults in the UK have now received the first dose of the Covid-19 vaccine.

However, Boris Johnson said that the currently data is still too ambiguous to make a definitive statement on whether enough people were vaccinated to ease lockdown restrictions later this month.

In UK economic data, today saw the latest mortgage approvals figure rise in April, with the Bank of England (BoE) predicting that house sales will remain strong.

The BoE commented:

‘Approvals for house purchase ticked up in April, to 86,900, from 83,400 in March. They have fallen from a recent peak of 103,400 in November, but have remained relatively strong.’

EUR/GBP Exchange Rate Forecast: Could a Bullish BoE Boost the Pound?

Euro (EUR) traders will be awaiting tomorrow’s release of the Eurozone’s latest PMI composite figure for May.

Any improvement in the outlook for the Eurozone economy would buoy the EUR/GBP exchange rate.

Tomorrow will also see the release of the latest UK Services PMI for May. If this is revised upward, then the Pound would head higher.

GBP investors will also awaiting tomorrow’s speech from the Andrew Bailey, the Bank of England’s Governor. Any bullish comments from the BoE would be GBP-positive.