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GBP/EUR, GBP/USD Exchange Rates Weaken despite UK Retail Sales Bettering Forecast

Markets continue to move away from Pound Sterling (GBP) on Thursday morning, in spite of stronger UK data while the US Dollar (USD) continues its bullish trend.

Stronger Retail Sales Data Fails to Rescue Pound Sterling (GBP) from Downtrend Today

Brexit fears have been putting fresh downward pressure on the Pound (GBP) this week, with a recent poll from ComRes showing that the lead of the ‘Remain’ campaign has narrowed to its lowest point yet. With a rash of new warnings over the possible impact of a Brexit markets have remained generally wary of Sterling.

There has been some respite for the Pound this morning as the latest UK domestic Retail Sales figures bettered expectations. While consumer spending did decline in February after a particularly strong showing in January, sales only dropped to 3.8% on the year rather than the 3.4% forecast. Despite this more positive result, however, Pound Sterling has continued to trend lower against its safe-haven rivals today.

Euro to Pound Sterling (EUR/GBP) Exchange Rate Trends Higher despite Dovish ECB Forecasts

A disappointing German GfK Consumer Confidence Survey has failed to particularly dent the Euro (EUR) this morning. Although investors had expected the measure to hold steady at 9.5 on the month in April, sentiment was found to have weakened to 9.4. While a fairly limited drop, this nevertheless reinforces the impression that conditions and confidence within the Eurozone’s powerhouse economy have continued to falter.

Encouragement was also lacking from the European Central Bank’s (ECB) latest Economic Bulletin, which showed a downward revision in the central bank’s inflation and growth outlooks. With the ECB having only recently unveiled a raft of monetary loosening measures designed to combat deflationary pressure, these less optimistic projections seem to raise further questions over the effectiveness of the central bank’s stimulus. Nevertheless, the Euro has continued to benefit from a weakened Pound this morning.

Weak Durable Goods Orders Predicted to End US Dollar (USD) Bull Run

Running counter to last week’s dovish Federal Open Market Committee (FOMC) meeting, a number of policymakers have been making particularly hawkish comments in recent days. While the majority of these dissenters, including Philadelphia Fed President Patrick Harker, do not actually hold a vote on policy this year traders have nevertheless reacted bullishly. In spite of yesterday’s New Home Sales posting a weaker recovery this has led to a strong surge in the US Dollar (USD), with hopes of an April interest rate rise.

This afternoon’s Durable Goods Orders may put something of a dampener on this recent confidence, however, if the forecast decline in orders materialises. Despite the hawkish rhetoric, if domestic data continues to demonstrate weakness the ‘Greenback’ is likely to soften somewhat.

Current GBP, EUR, USD Exchange Rates

At the time of writing, the Pound Sterling to Euro (GBP/EUR) exchange rate was trending lower in the region of 1.2595, while the Pound Sterling to US Dollar (GBP/USD) pairing was slumped around 1.4065. Meanwhile, the Euro to US Dollar (EUR/USD) exchange rate was trending narrowly at 1.1168.