Euro to Pound Exchange Rate Struggling to Advance despite Stronger Eurozone Data
The Euro to Pound Sterling (EUR/GBP) exchange rate has seen notable losses this week so far, and even as Eurozone data beats forecasts the Euro (EUR) has not been able to mount much of a recovery. Instead, Pound investors focus on UK election speculation.
After opening this week at the level of 0.8625, EUR/GBP quickly saw significant gains on UK election speculation.
EUR/GBP has continued to trend with a downside bias since then, briefly touching on a fresh six-month-worst level of 0.8552 earlier today.
Overall unless there is a surprise shift in movement tomorrow, EUR/GBP is on track to suffer over half a pence of losses this week, and the pair trends near the level of 0.8568 at the time of writing.
Euro (EUR) Exchange Rate Demand Limited despite Germany Avoiding Recession
While most of this week’s most notable Eurozone data has beaten expectations, and Germany’s latest growth projections even showed that the nation narrowly avoided recession, market demand for the Euro remains limited.
Germany’s economy avoiding recession was a relief to markets and officials, but analysts continue to warn that signs of recovery in German and Eurozone economies remain weak.
On top of persisting concerns that German economic performance will remain near-stagnant, German officials have indicated that there is little chance of fiscal stimulus from the government.
German FinMin Scholz: Q3 GDP figures could end debate on stimulus package. German econ not in crisis, no need for stimulus now. (BBG) pic.twitter.com/rZVsNaalNp
— Holger Zschaepitz (@Schuldensuehner) November 14, 2019
Overall, while today’s German and Eurozone growth stats beat expectations in some prints, the data was not enough to boost hopes for a solid Eurozone recovery, and the Euro’s performance remained limp.
Pound (GBP) Exchange Rates Resilient as UK Election Hopes Keep Currency Buoyed
Despite a week of disappointing UK ecostats, the Pound (GBP) has been able to sustain most of its gains. This has been due to persisting hopes that Britain’s upcoming general election will make a worst-case scenario no-deal Brexit even less likely.
Hopes for a no-deal Brexit to be avoided have caused significant Pound gains in recent months, and polls are leading analysts to believe that Britain’s ruling Conservative Party will win the election and be able to push through its relatively soft Brexit plans.
Due to these rising election hopes supporting the Pound, investors have generally overlooked recent weakness in UK data.
Today’s retail sales results printed an unexpected monthly contraction and analysts believed it indicated that consumer activity was being weighed by political uncertainty, but the Pound remained strong regardless.
Euro to Pound (EUR/GBP) Exchange Rate Awaits Eurozone Inflation Results
Investors have been hesitant to buy the Euro to Pound (EUR/GBP) exchange rate despite stronger Eurozone data and weaker UK data, as the long period of weakness in the Eurozone economy continues to weigh heavily on the currency.
As a result though, if Eurozone data keeps beating forecasts, it could support the Euro and even soften European Central Bank (ECB) easing speculation.
Tomorrow’s most noteworthy dataset will be the Eurozone’s final October Consumer Price Index (CPI) inflation rate report.
If Eurozone inflation beats forecasts, the Euro is likely to strengthen and ECB easing speculation could lighten. However, weaker Eurozone data would make it more likely that EUR/GBP ends the week near its worst levels in half a year.
Looking ahead to next week, Eurozone data and UK election developments will remain in focus once again for Euro to Pound (EUR/GBP) exchange rate investors.