- ‘Triple-Whammy’ of Poor UK PMI – Pound weaker on dovish analyst statements
- Eurozone PMI Disappoints – Eurozone Retail contracts but Euro trumps Pound
- Forecast: British Trade Deficit on Tuesday – Will March’s figure meet targets?
- Forecast: Eurozone GDP Next Week – Preceded by German data throughout
The Pound Sterling to Euro (GBP/EUR) exchange rate slipped limply into the weekend as the Pound’s attempts to recover were foiled, with lowered risk-sentiment bolstering the Euro and economic concern leaving Sterling weak.
GBP/EUR opened at 1.2759 last week, and closed in the region of 1.2645. While the Pound began to recover on Thursday and Friday, making it as high as 1.2706 during Friday’s session, the pair was ultimately down around -0.5% on Friday afternoon.
Pound (GBP) Flounders as Investors See Little Reason to Buy
The Pound’s previous data week revolved almost entirely around its April PMI reports, which all printed well below expectations.
Without shocking ‘Brexit’ arguments lighting up headlines to move the Pound, the currency was instead weighed by fears that the British economy could be nearing stagnation.
Thursday’s eagerly awaited Services PMI came in at a disappointing 52.3. As a result, the overall Composite PMI scored a low 51.9, well below March’s score of 53.6.
According to Bloomberg, many analysts and economists blamed ‘Brexit’ anxieties for the sudden slowing of the British economy, with some economists even suggesting that Britain’s Q2 GDP could suffer considerably as a result.
Euro (EUR) Boosted by Risk-Off Appetite despite Mixed Data
The Euro fared little better throughout the week, judging by Sterling’s numerous attempts at recovery in the face of its own underwhelming data.
Obstacles for the Euro included a dull economic bulletin from the European Central Bank (ECB). Released on Thursday, the bulletin matched the tone of April’s key rates decision meeting with no indication of any future decisions.
Eurozone PMI also struggled, with Friday’s figures dropping across the board.
German Construction worsened from 55.8 to 53.4, while Retail dropped from 54.1 to 51.0. The Eurozone Retail PMI contraction accelerated even further than its March score of 49.2, hitting 47.9.
The shared currency was bolstered against the Pound on Friday however, as poor United States data left the Euro a more appealing safe-haven asset than the US Dollar to risk-off traders.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast: BoE Decision and Eurozone GDP Ahead
Next week’s data could leave Sterling uninspired. The week kicks off with March’s trade deficit update, which has failed to impress investors in recent months.
A narrowing of the deficit could bolster Pound Sterling, although a worsening could send it reeling. The Bank of England’s (BoE) decision is also unlikely to inspire the Pound as policymakers will most likely agree to freeze rates once more, citing an uncertain economic future amid the possibility of a ‘Brexit’ in June.
The Euro, on the other hand, could see its strength bolstered if upcoming German data prints positively. German factory orders figures are set for release on Monday morning with industrial and manufacturing production reports due on Tuesday, as well as March’s German trade surplus figures.
Investors may also move on the Euro in anticipation for next Friday’s session, which will see not only preliminary Q1 Gross Domestic Product (GDP) for Germany and the general Eurozone, but also Germany’s final Consumer Price Index (CPI) reports for April.
GDP and CPI printing better-than-expected would likely send Euro sentiment soaring, though the Euro could otherwise remain weak.