Euro Pound Exchange Rate Struggles to Hold Highs as Euro Lacks Appeal
After days of losses for the Pound (GBP), the Euro Pound (EUR/GBP) exchange rate is tumbling back from highs today. Investors still have little reason to buy the Euro (EUR), so its gains against the Pound remain limited.
Since opening this week at the level of 0.8613, EUR/GBP has been trending with a largely upside bias as the Euro benefits from weakness in Sterling.
In the middle of the week, EUR/GBP touched on a high of 0.8644 – the best level for the pair in a fortnight. EUR/GBP has been falling back again today though, and at the time of writing trends in the region of 0.8595.
Key UK retail sales results and German business confidence data from Ifo could cause late-week movement in the Euro to Pound exchange rate tomorrow.
Euro (EUR) Exchange Rates Struggle on Eurozone’s Gloomy Outlook
The Euro attempted to benefit from weakness in rival currencies like the Pound and US Dollar (USD) for most of the week. However, its gains have been limited, due to a lack of particularly supportive news from the Eurozone lately.
According to Analysts at TD Securities, various concerns about the Eurozone’s coronavirus situation and dovish monetary policy continue to weigh heavily on the Euro:
‘Despite a recent bounce in EZ PMIs, the EUR still can’t buy a bid. Taken alongside the 200-dma breach, poor vaccine rollout, more lockdowns and more ECB buying suggests that EUR downside has further to run.’
Yesterday’s Eurozone PMI projections and today’s German consumer confidence stats beat forecasts. However this was not enough to boost Euro demand.
Pound (GBP) Exchange Rates Recover after Days of Losses
The Pound spent most of the week tumbling lower.
Investors found the British currency unappealing on UK-EU coronavirus vaccine tensions, then UK inflation data poured cold water on Bank of England (BoE) interest rate hike speculation.
However, Sterling has been steadying today. Even some weaker than expected UK retail data from the Confederation of British Industry (CBI) was not enough to prevent Sterling from recovering some ground against the Euro.
This was partially due to signs that EU leaders were unlikely to attempt to block coronavirus vaccine exports to the UK.
Euro Pound (EUR/GBP) Exchange Rate Could Advance Again on Tomorrow’s Data
The Pound is recovering against a weak Euro today, but the Euro to Pound exchange rate could advance again if UK data continues to disappoint.
Tomorrow will see the publication of Britain’s February retail sales results. If they beat expectations, they could keep investors optimistic that Britain’s economy will recover strongly from the coronavirus pandemic.
However, weaker than expected UK data could cause fresh losses for Sterling as it could offset some of the recent optimism in the UK outlook.
Tomorrow will also see the publication of Germany’s March business confidence report from Ifo.
If the German confidence report beats forecasts, it could boost hopes that the Eurozone’s own economic outlook will pick up momentum.
Of course, potential developments in the Eurozone and UK coronavirus situations will continue to be closely watched and could still cause some late-week Euro Pound exchange rate movement as well.