UK Retail Sales Fall but Pound Gains on Queen’s Birthday
With UK sentiment higher as a result of the Queen’s birthday celebrations, the Pound was able to firm against the Euro in spite of UK retail sales data showing a steeper-than-forecast drop in consumer spending.
The GBP/EUR exchange rate advanced to a high of 1.2718 even as the European Central Bank (ECB) opted to leave interest rates on hold at Thursday’s policy gathering.
With no UK reports scheduled for publication ahead of the weekend, Pound to Euro movement is likely to be triggered by the Eurozone’s preliminary Services and Composite PMI’s.
Looking ahead to next week, the UK’s most influential economic report is likely to be the nation’s growth data for the first quarter.
Pound Dips as Average Earnings Disappoint
The Pound edged slightly lower against the Euro as the European session progressed as the UK’s average weekly earnings report disappointed forecasts.
Average earnings including bonuses had been predicted to rise from 2.1% to 2.3%, but the report printed at 1.8%.
Employment growth was also below forecast.
According to Nick Palmer from the Office for National Statistics; ‘It’s too soon to be certain, but with unemployment up for the first time since mid-2015 — and employment seeing its slowest rise since that period — it’s possible that recent improvements in the labour market may be easing off.’
Pound losses were limited however as weekly earnings including bonuses held at 2.2% instead of dipping to 2.1%.
Investors also remained slightly weary of the Pound ahead of tomorrow’s ECB interest rate decision. While the central bank isn’t likely to make any alterations to fiscal policy in light of the decisions made in March, it may deliver some dovish commentary relating to the domestic and global growth outlooks. Any hints that fiscal policy will be adjusted again before the close of the year would be Euro negative.
The GBP/EUR exchange rate was trending in the region of 1.2659
GBP/EUR Exchange Rate Could Fall if Wage Growth Fails to Impress
The Pound Sterling to Euro (GBP/EUR) exchange rate dipped slightly as the European session began on Wednesday despite German Producer Price data falling short of forecasts.
Producer prices printed at 0.0% on the month in March, rather than the 0.2% expected, and -3.1% on the year.
If today’s UK employment numbers fail to show the acceleration in average earnings forecast by economists the Pound could extend losses as trading continues.
However, a sturdy average earnings print would be Sterling supportive.
The GBP/EUR exchange rate is currently trending in the region of 1.2649
- UK currency makes lacklustre movement today ahead of data shortage
- ‘Out’ campaign’s Gove to speak against yesterday’s Treasury predictions
- Euro generally declines despite cautious US economic predictions
- Imminent Eurozone survey results could unstick current GBP/EUR stalemate
The Pound Sterling (GBP) has generally been trending in a tight range against its competitors today, owing to more balanced coverage of the UK Referendum campaigns after yesterday’s focus on the dramatic and dovish Treasury report.
The Euro (EUR) has been soft overall, with a lack of enthusiasm likely fuelled by the failure of creditors to make direct progress in the Greek debt talks.
UK Economic News: Promise of More Rounded ‘Brexit’ Debate keeps GBP Stable
The Pound Sterling (GBP) has been soft against its peers overall today, with the only real gains being by 0.2% against the US Dollar (GBP/USD), 0.3% against the Indian Rupee (GBP/INR) and 1.1% against the Omani Rial (GBP/OMR). Losses have consisted of -0.2% against the Israeli New Shekel (GBP/ILS), -0.3% against the Polish Zloty (GBP/PLN) and -1.9% against the volatile Russian Ruble (GBP/RUB).
With the next UK economic data not due out until the afternoon, investors have instead paid attention the morning’s UK Referendum news, which has focused primarily on Justice Secretary Michael Gove. Also the Joint-Chair of the ‘Leave’ campaign, Gove has already been speaking out against both the Treasury report and the EU, calling the document a patronising effort that treats voters like ‘children’.
Additionally, Gove has put forward the dramatic metaphor that:
‘If we vote to stay [in the EU], we’re not settling for a secure status quo, we’re voting to be the hostages, locked in the back of the car, driven headlong towards deeper EU integration’.
In spite of this, however, the Pound has nonetheless advanced, owing to a recent telephone poll putting the ‘Remain’ campaign ahead on a 9-point lead.
Euro (EUR) Mixed as Greek Debt Talks Drag On
The Euro (EUR) has generally been an unappealing prospect to investors today, having fallen by -0.2% against the Polish Zloty (EUR/PLN) and -0.4% against the South African Rand (EUR/ZAR), in addition to making little progress against other rivals.
This stagnant state of affairs may have been brought about by the news that Greek ministers are looking at creditor proposals for cuts in exchange for debt relief, something that has the potential to lighten the current debt burden that the Greek government is struggling under.
Future GBP, EUR Forecast: Eurozone Surveys, Osborne and BoE Talks on tap
The next GBP/EUR influencing economic information will come shortly from the Eurozone, where the ZEW surveys for the currency bloc and Germany in April are due out.
Currently, predictions have been negative for the Eurozone printing but positive for the German ones.
The next UK news will come this afternoon, when Chancellor George Osborne speaks on the UK Referendum and Bank of England (BoE) Governor Mark Carney meets with the Lords Economic Affairs Committee.
However, tomorrow’s UK employment data is likely to have a more significant impact on GBP/EUR exchange rate trading.
Should average earnings increase, as they are currently expected to, the Pound may push higher against its European counterpart.
Current GBP, EUR Exchange Rates
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.2632 and the Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7917 today.