EUR/GBP Exchange Rate Sinks as Outlook for Eurozone Economy Deteriorates
The Euro Pound (EUR/GBP) exchange rate dipped today, with the pairing currently fluctuating around £0.86.
The EUR/GBP exchange rate suffered today following the release of the latest Eurozone Retail Sales data for February. The figure fell by -2.9%, slightly above forecasts.
Bert Colijn, the senior economist for the Eurozone at ING, explains:
‘The February increase in Eurozone retail sales was seen in most countries but driven by boosts thanks to easing relief measures. However, they are still below the 6% level seen in October 2020.
‘Given that Italy saw restrictions ease in February, helped the 8.4% increase in sales while the Netherlands allowed in-store pickups of online orders from mid-February, which resulted in a 5.4% increase for the month. Overall, levels of sales remain subdued at the moment, but this is mainly because substantial restrictions are still in place.’
However, Eurozone markets are becoming increasingly concerned about its economic prospects now that France and Germany have entered lockdowns to curb the spread of Covid-19.
Due to uncertainty about Europe’s coronavirus situation, however, EUR investors are becoming increasingly cautious.
Pound (GBP) Exchange Rate Edges Higher as UK Cautiously Reopens Economy as Non-Essential Shops Return to Service
The Pound (GBP) rose today as the UK’s non-essential shops have been able to reopen, along with pubs and restaurants for outdoor customers.
Consequently, UK markets have becoming more confident about the outlook for the nation’s economy now that a degree of normality has returned to its high streets.
British business confidence has also hit a record high.
Ian Stewart, Deloitte’s chief economist, explains:
‘Brexit has been a significant dampener on business activity in the last four years but with the UK’s final departure from the EU, such effects are fading. Combined with a successful vaccine rollout and a greatly improved global backdrop we are seeing a turbo-charged surge in business optimism.
‘Having come through the deepest downturn in 300 years UK businesses are firmly focussed on growth. Pent-up business and consumer demand are set to power a strong profits recovery, one already anticipated by the surge in equity markets since February.’
GBP investors will be awaiting this evening’s publication of March’s British Retail Consortium’s (BRC) retail sales figure.
Any improvement in the UK’s retail sector would be GBP-positive.
EUR/GBP Outlook: Could an Improving UK Economic Outlook Further Boost Sterling?
Euro (EUR) investors will be awaiting tomorrow’s release of the Eurozone’s ZEW Survey of Economic Sentiment for April.
Any improvement in the economic sentiment for the bloc would be EUR-positive.
Tomorrow will also see the release of Germany’s Wholesale Price Index for March. Any signs of a recovery in the Eurozone’s largest economy would boost the EUR/GBP exchange rate.
However, the Pound Euro (GBP/EUR) exchange rate could head higher tomorrow if the UK’s GDP or industrial and manufacturing production figure beats forecasts.