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British Pound to Euro Exchange Rate Forecast: GBP/EUR Breaches 1.41 after Retail Sales Surge, GBP/USD Brushes 1.57 Before Inflation

The UK’s impressive retail sales report saw the Pound Sterling to Euro (GBP/EUR) exchange rate briefly achieve 1.41 and the Pound Sterling to US Dollar (GBP/USD) exchange rate edge to 1.57.

Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) Exchange Rate News: UK Retail Sales Surge on the Month, Hawkish BoE Lends Sterling Support

On Wednesday comparatively hawkish minutes from the latest Bank of England (BoE) policy meeting boosted both the Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rates.

Sterling was able to achieve fresh highs against the common currency and ‘Greenback’ on Thursday after the UK’s retail sales report showed a far stronger than expected increase in consumer spending.

While a 0.2% monthly gain in consumer spending had been anticipated, retail sales actually climbed by 1.2% on the month.

The Guardian said of the retail sales data; ‘The volume of retail sales was up 1.2% between March and April, while the quarterly increase – a better guide to the underlying trend – was 0.7%. No hint there that consumers were apprehensive about the election result. While the politicians were out campaigning, voters were out shopping.’

‘The boost to disposable income from cheaper energy costs is only part of the story. Unemployment is falling and confidence is strong. Retailers have been cutting their prices, and with the cost of goods down by more than 3% year on year, there are plenty of bargains to be had.’

The positive UK ecostat kept the Pound buoyed throughout the European session and further GBP/EUR and GBP/USD exchange rate gains were accrued thanks to disappointing data from the US and Eurozone.

Pound Sterling to Euro Exchange Rate Forecast – Greek Negotiations Continue, German Data Highlights Growth Concerns

Initially the Euro clawed back losses against the Pound on Thursday as hopes that today’s gathering of Eurogroup officials in Riga would see the Greek negotiations move forward lent the common currency support.

However, below forecast Manufacturing and Services PMIs for Germany – the Eurozone’s largest economy – piled pressure on the Euro as the European session progressed.

The Pound Sterling to Euro (GBP/EUR) exchange rate hit a high of 1.4102

While the measures remained above the 50 mark separating growth from contraction, they showed a concerning slowing in output.

There were positives to be drawn from the latest batch of PMIs however, and the Eurozone’s Manufacturing PMI showed unexpected improvement.

Markit economist Chris Williamson said of the data; ‘The survey results suggest the German economy is on course for a reasonable expansion of 0.4% in the second quarter, but France is likely to struggle to see growth exceed 0.3%. However, it’s outside of these two ‘core’ countries where the main action appears to be, with the rest of the region enjoying its best quarter of economic growth and job creation for almost eight years.’

The Eurozone’s Consumer Confidence index also fell by more than expected.

Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast – US Dollar Falls as Manufacturing, Housing and Employment Data Disappoints

Comparatively dovish meeting minutes from the Federal Open Market Committee (FOMC) drove the Pound Sterling to US Dollar (GBP/USD) exchange rate higher on Wednesday and ‘Cable’ was able to extend gains following the publication of a run of disappointing data releases for the US.

The Pound Sterling to US Dollar (GBP/USD) exchange rate hit a high of 1.5670

US initial jobless claims were shown to have increased by more than expected while existing home sales fell.

The US Markit Manufacturing PMI also slid, prompting this response from one Markit economist; ‘Manufacturers reported their weakest growth since the start of 2014 in May, with the survey results adding to fears that the strong dollar is weighing on the US economy and hitting corporate earnings. Although falling only modestly, export sales have now dipped for two straight months, something not seen for two years and a far cry from the solid export performance seen this time last year. Overall order books are consequently growing at the slowest rate seen since the start of last year.’

Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast: UK Public Spending, German IFO Business Climate and US Inflation Data Ahead

With the weekend fast approaching, there are a number of economic reports for the UK, US and Eurozone with the potential to inspire GBP/EUR, GBP/USD exchange rate movement.

The UK will be publishing public spending figures while Germany is set to release first quarter growth numbers and the IFO Business Climate, Current Assessment and Expectations measures.

The business reports are believed to have fallen in May and if that proves to be the case the GBP/EUR pairing may climb back above 1.41 during the local session.

The day’s main news will be the US Consumer Price Index. If inflation in the world’s largest economy is shown to have fallen further into negative territory, as projected, the GBP/USD could consolidate gains above the 1.57 level.

The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.5699 and the Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.4078