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Euro Pound (EUR/GBP) Exchange Rate Steady ahead of ECB Minutes

EUR/GBP Exchange Rate Stable as ECB Minutes in Focus

The Euro Pound (EUR/GBP) exchange rate is trading in a narrow range this morning as markets brace for the release of the minutes from the European Central Bank’s (ECB) latest policy meeting.

At the time of writing the EUR/GBP exchange rate is currently trading at £0.8382, slightly up from this morning’s opening levels.

Euro (EUR) Flat as Markets Await ECB Minutes

The Euro (EUR) is mostly rangebound this morning as investors await the publication of the accounts from the ECB’s first policy meeting of 2020.

Markets will be hoping to gleam more about the ECB’s outlook on monetary policy from the minutes, as well as its latest take on the Eurozone economy.

EUR investors will be particularly interested in any references to the coronavirus outbreak in China and how the ECB believes it may impact the Eurozone.

Ahead of their release, ECB Vice-President, Luis de Guindos said that global headwinds remain a concern and that the Eurozone economy still needs strong support from monetary policy.

De Guindos said:

‘International trade remains weak and uncertainty around the future trading relationships among major global partners remains elevated.

‘Some forward-looking survey indicators show tentative signs of mild improvements. The outbreak of the coronavirus and its potential effect on global growth add a new layer of uncertainty.’

Positive Retail Sales Reading Fails to Inspire the Pound (GBP)

At the same time, the Pound (GBP) finds itself on the back foot against the Euro this morning in spite of some impressive headline figures in the UK’s latest retail sales report.

According to data published by the Office for National Statistics (ONS), domestic sales growth leapt by 0.9% in January, rising from -0.5% in December and catapulting retail sales to a 10-month high.

However, the Pound found only fleeting gains following the release of the retail sales figures, with analysts warning that there is no evidence yet that the rebound will prove to be more than a flash in the pan.

Kallum Pickering, senior economist at Berenberg, comments:

‘One month does not make a trend. Retail sales are typically quite volatile. However, they do provide an early indicator of the much bigger category of household spending – which makes up about 70% of GDP.

‘So far, the data just show a rebound from the fourth quarter and not yet evidence of a strong gains to come throughout 2020.’

EUR/GBP Exchange Rate Forecast: EU and UK PMIs in Spotlight

Looking ahead to the end of the week, movement in the Euro to Pound (EUR/GBP) exchange rate looks set to be dominated by the publication of the latest flash PMI estimate from both the Eurozone and UK.

This may send the Euro lower tomorrow morning as analysts forecast growth in the Eurozone’s private sector will have slowed in February.

EUR investors are likely to be particularly worried by Germany’s figures, amidst fears that the disruption caused by the coronavirus outbreak in China will have adversely impacted Germany’s export focused economy, potentially paving the way for a contraction in the Eurozone’s largest economy in the first quarter of 2020.

Conversely, economists are predicting another robust set of PMIs from the UK this month, with the Pound likely to find some support if another healthy expansion in the private sector helps to bolster hopes for a solid pick-up in UK economic growth at the start of the year.