EUR/GBP Exchange Rate Trending Lower in spite of British Like-for-Like Sales Decline
Overnight the Pound (GBP) was weakened as the British Retail Consortium’s (BRC) Like-for-Like Sales figure showed an unexpected contraction, falling from 2.6% to -0.2%. However, it has been suggested that this sizable drop was due to shoppers holding off in advance of the upcoming Black Friday discounts. As such the EUR/GBP exchange rate has failed to capitalise on this weaker showing, remaining on a downtrend in the region of 0.7111.
Although Greece has potentially failed to secure its next tranche of bailout funds today a better-than-expected widening of the German trade balance has pushed the Euro (EUR) into a positive trend.
Stronger than Forecast US Payroll Increased Odds of 2015 Fed Interest Rate Hike, EUR/GBP Exchange Rate set on Downtrend
Despite a larger than expected slump in German Industrial Production, which slipped from 2.3% to 0.2%, the Euro to Pound Sterling (EUR/GBP) exchange rate was on a strong uptrend on Friday morning. Sentiment towards the Pound (GBP) remained persistently weak following a dovish Bank of England (BoE) Inflation Report, even as the UK’s Visible Trade Balance showed that the national trade deficit had narrowed further than forecast.
However, the afternoon saw a dramatic reversal for the EUR/GBP pairing with the publication of the US Change in Non-Farm Payrolls report. Proving substantially stronger than pundits had anticipated, with 271,000 new jobs created within the domestic economy rather than 185,000, this prompted the US Dollar (USD) to surge across the board. Due to the negative correlation that exists on the EUR/USD exchange rate this sharp increase in ‘Greenback’ demand weighed heavily on the performance of the single currency ahead of the weekend.
News of Fresh Greek Bailout Disagreement Fails to Weigh on Euro (EUR) Today as German Trade Surplus Widens
Speculation is rife this morning that Greece will not be granted its next 2 billion Euro tranche of bailout funds, sparking fresh fears over the longer-term future of the Hellenic nation and the wider Eurozone. Prime Minister Alexis Tsipras’ government remains in deadlock with creditors over the value of residences covered by the country’s foreclosure laws, with Athens insistent that the threshold should remain at 200,000 Euros rather than being lowered. Naturally some of the faith in Tsipras’ popular mandate and power to negotiate with creditors has been lost as a result of this latest hurdle, indicating that the Greek debt crisis is far from over.
Nevertheless, the common currency has started the week on an uptrend, shored up by a reassuringly widened German trade surplus. Germany’s Trade Balance in September rose from 15.4 billion Euros to 22.9 billion, suggesting that the initial impact of the Volkswagen emissions scandal was not as sharp as might have been expected. This strong performance from the Eurozone’s powerhouse economy is easing the minds of traders, despite the increased possibility of the Federal Open Market Committee (FOMC) voting to increase interest rates in December.
EUR/GBP Exchange Rate Forecast: Pound Predicted to Rally on Uptrend in UK Average Weekly Earnings
With relatively little in the way of domestic data releases over the coming day the EUR/GBP pairing is likely to hold its current trend, barring any particularly detrimental developments at this afternoon’s meeting of Eurozone finance ministers.
Wednesday could see the Pound begin to rally, however, on the back of a raft of UK employment data. Should Average Weekly Earnings continue to edge up and the Jobless Claim Change show fewer new people signing on for unemployment benefits Sterling is likely to see a strengthening in demand. The disappointment of Thursday’s dovish BoE policy meeting may still continue to overshadow the Pound though, particularly if the week’s limited data falls short of expectations.
Current EUR, GBP Exchange Rates
At time of writing, the Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7146, while the Pound Sterling to Euro (GBP/EUR) pairing slumped in the range of 1.3993.