Encouraging numbers from the Eurozone gave the Euro (EUR) its awaited rally today as the Pound (GBP) finally began to falter on weaker Consumer Confidence.
Unemployment Data from Germany Eroded Common Currency as Sterling Remained High, EUR/GBP Exchange Rate Continued Lower
A significant increase of 9,000 in German unemployment was a far cry from the predicted decrease of 5,000 the market had been expecting. Beginning a day of further losses against the robust Pound the EUR/GBP exchange rate was quick to fall to 0.7019 in the wake of the news. Hopes for a rally later in the afternoon were equally dashed when Germany’s year-on-year inflation rate reached 0.2%, continuing to fall away from European Central Bank (ECB) targets of 2% as it failed to come in at 0.3% as anticipated. Both results triggered increasing concerns over the economic well-being of the Eurozone’s most influential member state, as it seems likely that the entire bloc will also be feeling the effects of the current global slowdown.
Continuing to trend highly on the early week’s positive UK numbers, on-target GDP and better-than-expected mortgage approvals, the Pound continued its hawkish run as the UK appeared to be faring better economically than its neighbours.
Pound (GBP) Takes Bearish Turn on Consumer Confidence, Euro (EUR) Gaining as Eurozone Inflation Rate Increases Today
However, Sterling’s dominance began to face challenges overnight after the UK’s Consumer Confidence Survey result indicated a general decline in certainty amongst the populace. Predictions had accounted for a lowered figure, as concerns over Osborne’s budget had undeniably had an impact in the last month, but in spite of this a shortfall still occurred. Declining on the previous month’s marked increase in optimism this was not too severe a blow for the Pound but did put a distinct dent in its bullish trends of previous days.
This morning saw the Euro make gains across the board as Retail Sales data for Germany released, demonstrating a highly positive year-on-year increase of 5.1%. Pushing the EUR/GBP exchange rate back up to peak of 0.7029 this prompted the pairing to return to an upwards trend. With the Eurozone’s overall core inflation hitting 1.0%, indicating that consumer prices went up in general, the common currency gained a further boost which is propelling it higher against the majors.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast: Greek Bailout Concerns Could Overshadow Boosted Euro
Once again, however, events in Greece are returning to haunt the common currency. The country’s third bailout seems to be potentially in trouble, as the IMF takes an increasingly hard line and refuses to sign up to the deal without further solid assurances. Divisions within Prime Minister Alexis Tsipras’ Syriza party also saw attempts to force the government out of the current bailout discussions, although these were quashed. Further hiccups and dissent such as this is likely to pull the Euro down from in spite of its recent gains.
With no further data due on this side of the weekend the Pound’s value will predominantly be at the mercy of competitors. Monday’s Manufacturing PMI for the UK, however, could signal that another rally for the currency around the corner, which could stand to drive the EUR/GBP pairing back down.
Current EUR, GBP Exchange Rates
EUR/GBP at time of writing is trending upwards at 0.7045 as GBP/EUR is slumping around the range of 1.4190.