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Euro Pound (EUR GBP) Slides as German Trade Data Misses the Mark

Pound Euro exchange rate forecast
  • Euro Pound Slides to 0.9008 – Pound Euro Hits 1.1096
  • German Trade Prints Disappoint – Demand for the Euro Drops
  • Brexit Anxieties Perpetuate – Pound Unperturbed

The Euro to Pound exchange rate dropped this morning after yesterday’s bout of disappointing German data prints.

German statistics office ‘Destatis’ reported that the nation’s exports and imports both contracted in June, dropping 2.8% and 4.5% respectively.

This was the biggest drop in exports since August 2015 for the Eurozone’s largest economy, and notably signalled the end of some five consecutive months of growth. The drop in imports, also, was the most significant since January 2009.

In addition to the falling import and export numbers the overall trade balance failed to rise as much as previously anticipated – coming in at 22.3bn in June, up from 22bn in May.

The contraction in growth of imports and exports has been seen by some to be indicative of the beginnings of a long-expected slowdown in the Eurozone’s largest economy.

Understandably the Euro Pound exchange rate pared some of its recent gains as a result of these figures, although it still remains teetering at highs not seen since November last year.

Pound Sterling (GBP) Climbs despite Latest Brexit Concerns

The Pound’s climb this morning has occurred despite the latest Brexit concerns, causing some to postulate on the possibility that Sterling’s movements are beginning to become less and less sensitive to the ‘noise’ surrounding Brexit discussions.

Sir Simon Fraser, former head of the diplomatic service, recently asserted that Brexit negotiations had not begun promisingly and that significant divisions within the cabinet were forming on weighty debates like the freedom of movement and the exit bill.

He stated:

‘We haven’t put forward a lot because, as we know, there are differences within the Cabinet about the sort of Brexit that we are heading for and until those differences are further resolved I think it’s very difficult for us to have a clear position’.

The Pound’s latest climb occurred despite this news.

Quiet Day for EUR GBP Data – But what’s on the Horizon?

This morning is a quiet day for EUR GBP related data, however this after afternoon will see the release of the UK’s RICS house price balance figure for July.

Currently this figure is forecast to climb from 7% to 9% – a significant uptick in surveyors’ opinions on the state of the housing market.

If the report prints well then the Euro may find itself slipping even further against the Pound, especially with a lack of additional Eurozone data until Friday.

Thursday too will feature a run of UK data sets, including industrial production, manufacturing production and construction output, (all of which are forecast to have increased) and notably the UK’s trade balance figure.

The UK’s trade deficit (in respect to the total trade balance) is expected to have dropped from -£3073 to -£2500 in June – again, if this occurs then the Pound could be liable to climb further.