Stronger-than-Expected German Trade Surplus Bolsters Euro (EUR) Demand Today
This morning’s German Trade Balance bettered forecast, only narrowing from 22.8 billion to 22.5 billion Euros (EUR), to shore up confidence in the single currency further. As today will see no fresh economic data from the UK, the Pound Sterling to Euro (GBP/EUR) exchange rate is set to remain on a downtrend in the region of 1.3775.
After the UK’s November retail sales proved more disappointing than anticipated this morning, the Pound Sterling to Euro (GBP/EUR) exchange rate has continued to cede ground.
Euro (EUR) Remains Dominant on Strengthened Eurozone GDP after Limited ECB Easing
Following last week’s less dovish than expected European Central Bank (ECB) policy meeting the single currency (EUR) has remained on a stronger trend after the weekend, buoyed in spite of ECB President Mario Draghi’s attempts to talk the Euro back down. A further boost was in store for the common currency this morning as the Eurozone’s third quarter Gross Domestic Product printed in line with traders’ expectations at 1.6%. As this demonstrated a slight increase in economic growth on the year this helped to shore up the single currency as the latest commodity rout fuelled fresh safe-haven demand.
Pound Sterling Currency News: GBP Bearish Today after UK Manufacturing Production and November Retail Sales Contract
Sentiment towards the Pound (GBP), meanwhile has not improved on Tuesday after both the British Retail Consortium’s Like-for-Like Retail Sales and the October Manufacturing Production figures failed to impress. Despite the Black Friday discounts, sales in November were found to have slipped on the year by -0.4%, signalling the month’s weakest performance in four years. While annual Industrial Production was decidedly stronger than expected, rising from 1.5% to 1.7%, this was outweighed by the continued slowness of the domestic manufacturing sector.
There was no particular surprise as the National Institute of Economic and Social Research’s November GDP estimate for the UK was revealed to have remained at 0.6%, suggesting that the outlook of the local economy is unchanged in spite of negative global headwinds. Nevertheless, this figure was not sufficient motivation to prompt traders to buy back into Sterling today, leaving the GBP/EUR exchange rate in a strong downtrend.
GBP/EUR Exchange Rate Forecast: Pairing Predicted to Trend Lower ahead of BoE Rate Decision
Should tomorrow’s German Trade Balance show any narrowing of the national surplus, however, the bullish run of the Euro could be dented. Nevertheless, as the price of commodities such as oil and iron ore continue to plunge to fresh multi-year lows, the single currency is likely to remain on stronger form thanks to a pervasive atmosphere of market risk aversion.
UK data will be relatively limited ahead of Thursday’s Bank of England (BoE) policy meeting and rate decision. While investors remain unconvinced of the possibility of an imminent interest rate move, given the determined dovishness of some policymakers, there are hopes that the tone of the meeting notes will prove more optimistic.
Current GBP, EUR Exchange Rates
At time of writing, the Pound Sterling to Euro (GBP/EUR) exchange rate was slumped in the region of 1.3774, while the Euro to Pound Sterling (EUR/GBP) pairing was making gains around 0.7258.