GBP/EUR Exchange Rate Strengthens Following Weak Eurozone PMIs
The Pound Euro (GBP/EUR) exchange rate is on the offensive this morning, as the single currency comes under pressure from the release of the Eurozone’s latest PMI figures.
At the time of writing, the GBP/EUR exchange rate has risen roughly 0.3% this morning, propelling the pairing to around €1.1535.
Euro (EUR) Exchange Rates Slide on Weak PMI Readings
The Euro (EUR) fell back against the Pound (GBP and the majority of its other peers this morning as EUR investors digest the Eurozone’s latest PMI release.
According to data published by IHS Markit growth in the Eurozone’s private sector weakened again in April, with the bloc coming dangerously close to stagnation.
The Eurozone’s manufacturing sector remained a major soft spot as factory activity contracted for the third consecutive month, while the service sector also underwhelmed.
Most worrying for EUR investors however is that the stagnation in growth has now stretched in the second quarter, which indicates that the Eurozone may be facing a prolonged slowdown.
Chris Williamson, Chief Economist at IHS Markit, said:
‘The Eurozone economy started the second quarter on a disappointing footing, with the flash PMI falling to one of the lowest levels seen since 2014.
‘The data add to worries that the economy has failed to rebound with any conviction from one-off factors that dampened activity late last year, and continues to show only very modest growth in the face of headwinds from slower global demand growth and subdued economic sentiment.’
Pound Sterling (GBP) Exchange Rates Strengthened by Surging Retail Sales
At the same time the Pound (GBP) was buoyed this morning following the release of some surprising strong UK retail sales figures.
The Office for National Statistics (ONS) reported that sales growth rocketed up from 0.6% to 1.1% in March, the strongest reading since November and easily beating expectations that growth would have contracted by 0.3%.
The rise comes in spite of heightened Brexit uncertainty last month, with the ONS attributing it to the milder weather this year compared to 2018 when spending was curtailed by the Beast from the East.
Commenting on the data the ONS’s head of retail sales, Rhian Murphy said:
‘March’s mild weather boosted sales, with food shops also recovering after a weak February. Over the longer term, department stores were the only shop type to see their sales shrink.’
GBP/EUR Exchange Rate Forecast: Weak Consumer Confidence to Dent the Euro?
Looking ahead to next week’s session, we may see the the Pound Euro (GBP/EUR) exchange rate strengthen in the first half of the week, following the publication of the Eurozone’s latest consumer confidence index.
Economists forecast that Eurozone consumers will have remained mostly pessimistic in April, with concerns over a slowdown in the bloc as well as rising Brexit uncertainty likely dampening sentiment.
Meanwhile it looks to be a quiet week on the UK data front next week, likely resulting in GBP investors focusing on the Confederation of British Industry’s (CBI) latest distributive trades index.
This may see the Pound weaken in the latter half of the week if the CBI reports that UK retail activity slowed in line with expectations in April.