EUR/GBP Exchange Rate Rangebound Despite Growing Fears Over the Eurozone’s Retail Sector
The Euro to Pound (EUR/GBP) exchange rate held steady throughout today’s session, with the pairing currently trading around £0.90.
The Euro (EUR) failed to gain on the Pound (GBP) despite a stronger-than-expected Eurozone PMI composite figure for July. Which rose from 54.8 to 54.9. As a result, EUR investors have become increasingly concerned for the bloc’s economic recovery in the months ahead.
Chris Williamson, Chief Business Economist at IHS Markit, commented:
‘Eurozone service sector business activity rebounded in July to grow at a rate not exceeded for over two years. France and Germany enjoyed especially strong gains though renewed growth was also recorded in Spain and Italy as COVID-19 containment measures continued to be relaxed.’
Meanwhile, the Eurozone’s retail sales figure for June undershot forecasts, sinking from 20.3% to 5.7%. Consequently, this has left many single currency investors concerned for the Eurozone’s retail sector as the coronavirus crisis continue to deter shoppers.
Pound (GBP) Steady as Positive UK Services PMI Masks ‘Underlying Problems’ in British Economy
The Pound (GBP) held steady against the Euro (EUR) following the release of the final UK services PMI for July, which undercut forecasts slightly at 56.5. However, with the UK’s largest sector faring well despite the Covid-19 crisis, this has provided some support for Sterling.
Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply, commented on the report:
‘This undoubtedly good news is masking some underlying problems that will still need addressing. Employment fell even more quickly in July as some firms made redundancies in response to worries about the length of the recovery. Although in a small minority, other service providers found new opportunities to hire talent and had the pick of the bunch to fill vacancies from growing numbers of applications.’
Meanwhile, there are growing concerns over Britain’s unemployment levels after several chains, including WH Smiths, Pizza Express, and others, have said that they cut jobs within the thousands owing to the coronavirus crisis.
EUR/GBP Forecast: Could the Euros Sink on Weak German Factory Orders?
Euro (EUR) investors will be looking ahead to tomorrow’s release of the latest German factory orders figures for June. If these fall below consensus, however, we could see the single currency suffer.
Pound (GBP) traders will be awaiting tomorrow’s interest rate decision from the Bank of England (BoE). However, the Bank is expected to hold its interest rate at 0.1%. Nevertheless, a dovish monetary policy statement would drag down Sterling.
The EUR/GBP exchange rate will remain sensitive to the Eurozone’s economic outlook this week. If data continues to point to a significant recession for the bloc, then we could see the pairing fall deeper.