Euro to British Pound (EUR/GBP) Exchange Rate Softer before ECB Decision
After advancing yesterday in the wake of a better-than-expected retail sales report for the Eurozone, the Euro to British Pound (EUR/GBP) exchange rate edged lower on Thursday.
Demand for the common currency was undermined by a less-than-impressive German Factory Orders print.
Orders were shown to have fallen by -3.9% on the month, a far steeper drop than the -1.0% decline anticipated.
Today’s ECB and BoE interest rate announcements could have an impact on EUR/GBP trading.
The Euro to British Pound (EUR/GBP) exchange rate is currently trading in the region of 0.7244
EUR/GBP Exchange Rate Claws back Losses after Services PMI, Retail Sales
As the European session progressed the Euro to British Pound (EUR/GBP) exchange rate was able to pare losses following the release of below-forecast UK data and unexpectedly strong retail sales figures for the Eurozone.
The UK’s Services PMI failed to climb as expected and actually eased from 57.2 to 56.7 in February.
Meanwhile, the Eurozone’s retail sales report surpassed all expectations by showing sales growth of 1.1% in January, month-on-month, and annual expansion of 3.7% instead of the 2.3% expected.
After the data was published the Euro to British Pound (EUR/GBP) exchange rate was trading in the region of 0.7258
The Euro to British Pound (EUR/GBP) exchange rate could brush a fresh 7-year low this week if the European Central Bank (ECB) fails to source the amount of bonds needed to fund its highly anticipated quantitative easing programme.
EUR/GBP Exchange Rate Slides ahead of UK Services PMI
The Euro to British Pound (EUR/GBP) exchange rate spent much of Tuesday’s session trading in a slightly stronger position despite the UK’s Construction PMI printing above-forecast levels.
However, although Germany’s retail sales report surprised to the upside, the Euro went on to edge lower as a result of a disappointing Producer Price Index for the Eurozone and a Sentix report revealing an increase in ‘Grexit’ expectations.
The Euro to British Pound (EUR/GBP) exchange rate hit a low of 0.7244
Reports that the ECB is struggling to find all of the government bonds needed to back its QE programme also wore on the common currency.
According to industry expert Richard Dunbar; ‘The ECB tells us that there are €7,429bn of government bonds outstanding. It “only” owns €171bn of them and, under Draghi’s plans, the aim would be to increase this to nearer €1 trillion – not an inconsiderable figure. But when he surveys the market, he has to work out exactly who is going to sell him their bonds, and here he may have a problem.’
British Pound to Euro (GBP/EUR) Exchange Rate Close to 1.38
The British Pound to Euro (GBP/EUR) currency pair returned to trending just below 1.38 ahead of the publication of the UK’s Services PMI.
As the services sector accounts for around 75% of total UK growth, an impressive increase in this measure would be Pound supportive.
Economists are expecting the index to show a gain from 57.2 to 57.5 – a higher figure than this could push the GBP/EUR pairing to its strongest level of the week so far.
The Euro to British Pound (EUR/GBP) exchange rate hit a high of 0.7281
During the European session final services and composite PMI’s for the Eurozone and its largest economies were released.
Although some of the indexes were negatively revised from previous estimates, all remained above the 50 mark separating growth from contraction.
Euro to British Pound (EUR/GBP) Exchange Rate Forecast: Retail Sales Figures Ahead
Later today the Eurozone will be releasing retail sales figures for January.
Sales are believed to have risen by 0.2% on a monthly basis.
Slower sales growth could put pressure on the common currency, while stronger expansion may give it a boost ahead of tomorrow’s European Central Bank interest rate decision.
Tomorrow’s German Factory Orders and Retail PMI will also be of interest.
The British Pound to Euro (GBP/EUR) exchange rate was trending in the region of 1.3803
The Euro to US Dollar (EUR/USD) exchange rate was trending in the region of 1.1131
The US Dollar to Euro (USD/EUR) exchange rate was trending in the region of 0.8981
The Euro to British Pound (EUR/GBP) exchange rate was trending in the region of 0.7244