Euro Pound Exchange Rate Falls as Eurozone Data Fails to Support Euro
Despite a resurgence in demand for the Euro (EUR) last week, the Euro Pound (EUR/GBP) exchange rate is falling again this week. The Euro has failed to hold its ground much, due partially to continued concerns in Eurozone confidence.
Last week’s EUR/GBP gains were huge. After briefly touching on a monthly worst of 0.8473, EUR/GBP ultimately surged from the level of 0.8503 to 0.8682 throughout the week, a gain of almost two pence.
EUR/GBP touched on a fresh monthly best level of 0.8694 when markets opened yesterday, but the pair has since been sliding back from its highs. At the time of writing on Tuesday, EUR/GBP is still tumbling and is trending in the region of 0.8644.
With no notable UK data due until next week, the Euro to Pound exchange rate will be driven more by coronavirus news and Eurozone data in the coming sessions.
Euro (EUR) Exchange Rates Dampened by Disappointing Eurozone Sentiment Data
Demand for the Euro has been limited again this week. Investors have been hesitant to keep buying the Euro after last week’s surge, as movement in the Euro’s rivals the Pound (GBP) and US Dollar (USD) calmed.
The latest Eurozone data has not been enough to help the Euro hold highs against resilient rivals. Today’s German wholesale prices report beat forecasts, but economic sentiment data from ZEW fell short.
Economic sentiment in Germany was expected to rise to 79, but concerns of further lockdown in the Eurozone’s biggest economy saw the April print come in at just 70.7.
Pound (GBP) Exchange Rates Strengthen as UK Economic Activity Beats Expectations
February was the first full month of Britain’s third coronavirus lockdown. As a result, it was heavily expected to be a dire month for Britain’s economic activity.
However, while it was indeed a fairly weak month, today’s UK data indicated the economy actually fared much better than expected throughout the month overall.
Britain’s monthly growth rate printed 0.4% month-on-month, and the three months figure came in with a better than forecast –1.6%.
Analysts believe the data points to what many had been hoping: that Britain’s economic recovery will continue to strengthen. According to Thomas Pugh at Capital Economics:
‘with schools having opened in March and outdoor hospitality and non-essential retail stores opening yesterday, the rises in GDP should be much stronger in the coming months. By early next year, we think the economy will have returned to the pre-pandemic level.’
Euro Pound (EUR/GBP) Exchange Rate Investors Focus on Coronavirus, Eurozone Data
With all of this week’s notable UK data having been published already, Euro to Pound exchange rate investors will be looking elsewhere for news that could influence investment.
Tomorrow will see the publication of Eurozone data including industrial production. A speech from European Central Bank (ECB) President Christine Lagarde could also be influential.
Thursday will follow with German and French inflation rate data, with Eurozone inflation and trade data rounding off the week on Friday.
Of course, any surprising developments in the Eurozone or UK coronavirus situations could also cause movement.
If there are more signs that the Eurozone’s vaccination rollout is improving, the Euro Pound (EUR/GBP) exchange rate is more likely to avoid losses.