Euro (EUR) Remains on Downtrend Today as German Retail Sales Figures Disappoint, EUR/GBP Exchange Rate Slumps
As August German Retail Sales were revealed to have fallen by further than forecast this morning, to 2.5% rather than 3.3%, the single currency (EUR) has entered a downturn against many of the majors. Consequently, the EUR/GBP conversion rate is currently shedding value in the region of 0.7414.
Positive UK Mortgage Approvals data have sent the Pound (GBP) on a more bullish trend this morning, with the EUR/GBP exchange rate slipping as a result.
Volkswagen Crisis Weighed on Prospects of the Single Currency (EUR) as Pound (GBP) Began to Recover Ground
While it was a relatively slow start to the week in terms of major economic data releases, the EUR/GBP pairing entered a downtrend on Monday, likely thanks to the mounting pressures surrounding the Volkswagen emissions scandal. As Audi and Skoda both admitted to having produced similarly fraudulent performance data for a number of their diesel cars, the crisis seemed poised to draw in the rest of the automobile industry, severely denting investor confidence in the German economy and the Euro (EUR) by extension. This threat to the Eurozone’s economic powerhouse, however, failed to weigh down the common currency for long, as persistent global slowdown concerns and stock slumps began to take their toll on the Pound (GBP).
Weaker German Import Prices Drive down EUR/GBP Conversion Rate from Four-Month Best, Sterling (GBP) Strengthens on Mortgage Figures
This morning’s German Import Price Index produced a slightly larger contraction than investors had been anticipating, as year-on-year prices fell from -1.7% to -3.1%, but this disappointment was not enough to sufficiently damage the single currency. Overnight, the EUR/GBP exchange rate rose to a four-month best of 0.7435 and, in spite of a dip in response to this weak showing, the pairing has remained on a bullish run today. Investors appear to regard the upcoming German Consumer Price Index figures with relative optimism, hopeful that the case will not be made for the European Central Bank (ECB) to step up its monetary loosening measures in order to bolster progress towards its inflation targets.
However, today’s UK Mortgage Approvals for August printed at an unexpected increase to give Sterling a substantial boost. Reflecting positively upon the domestic housing sector, and the wider economy as a result, this positive showing has helped to push the EUR/GBP exchange rate lower.
EUR/GBP Exchange Rate Forecast: Stronger Uptick Possible for Common Currency with Upcoming German Unemployment Figures
German Retail Sales and Unemployment data due out on Wednesday could provide a further boost to the strengthening Euro, although shortfalls could compound concerns surrounding the Eurozone economy and lead to a greater decline in demand for the single currency. Should these follow up a strong showing on today’s domestic Consumer Price Index the EUR/GBP currency pair may be in for a sustained run of gains, with reassuring figures likely to significantly buoy the common currency.
Tomorrow’s second quarter UK Gross Domestic Product is unlikely to offer any particular stimulus for the Pound, as the finalised figure will most probably line up with the early provisional number. Of greater impact will be the local Manufacturing and Construction PMIs for September, which are forecast to be somewhat mixed. Any signs of robustness within the UK economy would lend some strong support to the prospects of Sterling, particularly if they begin to provide a more compelling argument for a nearer-term interest rate rise from the Bank of England (BoE).
Current EUR, GBP Exchange Rates
At time of writing, the Euro to Pound Sterling (EUR/GBP) exchange rate was slumping in the range of 0.7390, with the Pound Sterling to Euro (GBP/EUR) pairing climbing around 1.3529.