Euro Pound (EUR/GBP) Exchange Rate Muted as German Unemployment Data Disappoints
The Euro Pound Sterling (EUR/GBP) exchange rate remained flat and the pairing is currently trading at an inter-bank rate of £0.8826.
The German Statistics Office revealed that unemployment rose from a record low 4.9% to 5% in May.
This was the first time in almost two years that German unemployment has unexpectedly increased.
Further data showed the unemployment change jumped by a higher-than-forecast 60,000 people.
The Federal Labour Agency stated that around two-thirds of the rise was due to reclassification of some people.
However, the Agency also cited the slowdown in the economy which likely dampened sentiment in the single currency.
Commenting on the data, the Federal Labour Agency stated that they ‘are seeing the first signs of a weakening economy on unemployment.’
Sterling (GBP) Flat as UK Shop Prices Rise to Second Highest Level in Six Years
On Wednesday data showed UK shop prices have increased to the second highest level of growth in six years.
The British Retail Consortium (BRC) revealed that UK shop price inflation rose from 0.4% to 0.8% in April.
Non-food prices increased by 0.2% after a -0.6% fall in the previous month, making it the second month of rising non-food inflation in 2019.
However, Brexit pessimism likely continued to weigh on Sterling.
Commenting on the data, Helen Dickinson, BRC Chief Executive said:
‘Shop Price growth in May was the second highest rate in the last six years, though it remains well below headline inflation.
‘Rising costs associated with currency depreciation, stockpiling, rising minimum wage and the Apprenticeship Levy, have all put upwards pressure on prices for a while, and it now appears that retailers cannot absorb them any longer.
‘Unless the Government addresses future cost rises, including spiraling business rates, we may see larger price rises in the future.’
Euro Pound Outlook: Will Disappointing German Retail Sales Weigh on EUR?
Looking ahead to Friday, the Pound (GBP) could rise against the Euro (EUR) following the release of the UK GfK consumer confidence.
If consumer confidence rises higher than forecast, it could provide an upswing of support for Sterling.
Meanwhile the single currency could slide following the release of the German retail sales.
If retail sales contract further than markets expect, the Euro Pound (EUR/GBP) exchange rate could slide.