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Euro Pound Exchange Rate Edges Higher as German Economic Sentiment Improves in May

Euro Pound exchange rate forecast

EUR/GBP Exchange Rate Rises on Positive Eurozone Economic Morale

The Euro Pound (EUR/GBP) exchange rate rose today following the publication of the latest German ZEW survey of economic sentiment for May. The figure beat forecasts rising to 84.4. The pairing is trading around €0.85 at the time of writing.

The EUR/GBP exchange rate benefited from growing confidence in the Eurozone’s largest economy. Germany’s economic situation has significantly improved over the last few months, boosting the outlook for the bloc’s economy as a whole.

ZEW president Professor Achim Wambach commented on the data:

‘The braking of the third wave of Covid-19 has made financial market experts even more optimistic. In the May survey, ZEW economic expectations reach their highest level in more than 20 years.

‘The assessment of the economic situation is also improving noticeably. The experts expect a significant economic upturn in the next six months. The economic outlook for the euro area and for the United States is also improving considerably.’

Today also saw the release of the Eurozone’s economic sentiment gauge for May, which also beat forecasts and rose to 84.

Nevertheless, some EUR investors are remaining cautious as the delay in Covid-19 vaccination rollouts across Europe could weigh on the Eurozone’s economic growth this year.

Pound (GBP) Exchange Rate Dips Despite Confirmation of England’s Lockdown Easing in May

The Pound (GBP) failed to gain against the Euro (EUR) today despite Prime Minister Boris Johnson confirming that England will further ease lockdown measures on 17May and in June.

The PM commented:

‘[W]e’re taking a step toward that moment when we learn to live responsibly with Covid, when we cease eventually to rely on detailed government edicts and make our own decisions based on the best scientific advice about how best to protect our families and those around us.’

As a result, GBP investors have become more confident about the outlook for the UK economy, which is expected to recover once lockdown is further eased.

In UK economic news, last night saw the release of the latest UK BRC retail sales figure for April which rose by 39.6%.

Helen Dickinson, the BRC’s chief executive, commented:

‘However, this sales growth is fragile. There is little competition for share of spending while parts of hospitality, leisure, and tourism remain restricted and inner cities and town centres continue to perform poorly as many people continue to work from home.’

EUR/GBP Exchange Rate Forecast: Could a Strong German Inflation Reading Boost the Single Currency?

Pound (GBP) traders will be awaiting tomorrow’s release of the flash UK GDP figure for the first quarter. If this shows that the UK economy struggling in the first quarter of this year, then the GBP/EUR exchange rate could continue to fall.

Tomorrow will also see a speech from the Bank of England’s (BoE) Governor Andrew Bailey. Any signs of further bullishness form the bank, however, would boost Sterling.

Euro (EUR) investors will be eyeing tomorrow’s publication of Germany’s harmonised inflation data for April. If this shows an improvement in the Eurozone’s largest economy, then the Pound Euro exchange rate would suffer.