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Euro Pound (EUR/GBP) Exchange Rate Flat despite German Trade Surplus Expansion

Euro Pound (EUR/GBP) Exchange Rate Static despite Upbeat German Trade Data

The Euro Pound (EUR/GBP) exchange rate is trading within narrow boundaries this morning, despite surprisingly positive German trade data.

At the time of writing, EUR/GBP is trading at around £0.8668, showing little movement from the morning’s opening rates.

Euro (EUR) Firms amid German Trade Surplus Increase

Today, the Euro (EUR) is seeing minor tailwinds following the publication of the latest German trade data.

In August, the German trade surplus expanded significantly above forecasts, climbing from €15.9bn to €16.6bn, beyond estimates of a fall to €15bn.

As the Eurozone’s largest economy, and one dependent on exports, the news provided a minor boost to the common currency.

However, additional data found that exports had fallen by 1.2% on a monthly basis. Though, as this reflected an improvement on previous readings, it still indicated weakness in German exports.

Because of this, the Euro appears unable to firmly capitalise on this news, with its gains appearing small in scope.

Furthermore, the US Dollar (USD) has begun to recover during the session, amid a shift to more cautious trade.

As the pairing shares a negative correlation, strength in the US Dollar is weighing on the common currency, further limiting its appeal.

Pound (GBP) Listless amid Light Data Calendar

The Pound (GBP) is trading without much direction this morning, as macroeconomic data remains in short supply.

Due to the lack of movement catalysts, Sterling looks to be trading largely in line with the market mood. Due to its increasingly risk-off nature, the cautious mood is yielding a slight downward trend.

Furthermore, momentum from yesterday’s stronger-than-expected reading from the final UK services index appears to have dissipated.

Investors may be analysing the accompanying report, which indicated persistent pressure in the sector, and further reiterated the fastest contraction eight months.

Additionally, suggestions of a slowdown in hiring and waning inflationary pressures may be causing GBP investors to pare back their bets on further tightening from the Bank of England (BoE).

Euro Pound Exchange Rate Forecast: ECB Speech to Buoy EUR?

Looking ahead for the Euro, European Central Bank Vice President Luis de Guindos is scheduled to deliver a speech this afternoon.

If he takes a hawkish stance in his speech, the Euro could strengthen as investors move to bet on future tightening from the ECB.

On Friday, the latest German factory orders are scheduled for publication. Economists forecast that orders in August will have increased by 1.8%, which may bring cheer to EUR investors as it could represent a significant recovery.

For the Pound, the lack of data releases is set to continue through to the end of the week. Because of this, Sterling may be left exposed to shifts in risk appetite.

As an increasingly risk-sensitive currency, GBP could strengthen if trading conditions improve. However, if the mood sours, GBP could weaken against safer assets.