Homepage » News » EUR/GBP » Euro Pound Exchange Rate Holds onto Uptrend after Bullish Eurozone Retail Sales

Euro Pound Exchange Rate Holds onto Uptrend after Bullish Eurozone Retail Sales

Eurozone retail sales showed strong growth of 2.3% in March, offering a fresh boost to the Euro on Thursday morning.

Alongside better-than-expected Spanish and Italian services PMIs this furthered the impression that the currency union is in a robust state of health.

While there was some loss of momentum in France and Germany the mood towards the single currency remained optimistic, with both countries remaining in a solid state of growth.

This strong raft of data bodes well for the outlook of the Eurozone economy, as Chris Williamson, Chief Business Economist at IHS Markit, noted:

‘The April Eurozone PMI is historically consistent with a GDP growth rate of 0.7%, with similar rates of expansion signalled for both Germany and France. Even faster gains are being indicated in Spain and Ireland and Italy is also seeing growth perk up, highlighting the increasingly broad-based nature of the current upturn.’

Demand for the Euro also picked up in response to the final televised debate of the French presidential election, with opinion polls continuing to point towards a win for centrist Emmanuel Macron.

Even so, jitters over the outcome of the election are still likely to weigh on the Euro Pound exchange rate ahead of the weekend.

Downside pressure could also stem from the latest comments from European Central Bank (ECB) President Mario Draghi.

If Draghi opts for a more dovish tone the appeal of the Euro could weaken, with markets disappointed by the central bank’s reluctance to return to a tightening bias.

Although confidence in the Pound strengthened in the wake of a bullish UK services PMI this was not enough to dent the EUR GBP exchange rate.

While this pointed towards the economy getting off to a stronger start in the second quarter, given that the majority of domestic growth is driven by the service sector, investors still saw some cause for concern.

The report highlighted the continuing increase in price pressures and rising inflation, also offering fresh evidence that consumers have already started to cut back.

A more marked dip in mortgage approvals further eroded demand for Sterling, as the continued momentum of the economy remains in question.

With hopes for next week’s Bank of England (BoE) policy meeting relatively low, and the odds of a shift in policymaker sentiment limited, market appetite for the Pound is unlikely to pick up particularly.

Developments in the Brexit debate also have the potential to provoke volatility for the EUR GBP exchange rate, as worries have mounted in response to hardening rhetoric from both sides of the Channel.

If relations between UK and EU officials sour further in the near future this could prompt further selling of the Pound.

Current EUR GBP Interbank Exchange Rates

At the time of writing, the Euro Pound exchange rate was trending higher at 0.84. Meanwhile, the Pound Euro exchange rate was slumped at 1.17.