GBP/EUR Exchange Rate Rangebound as Euro Investors Await ECB Speech
The Pound to Euro (GBP/EUR) exchange rate held steady this morning, with the pairing currently fluctuating around €1.12.
The Euro (EUR) struggled to gain on Sterling this morning following the release of Germany’s industrial production report for April, which fell below forecasts from -8.9% to -17.9%. As a result, single currency traders are becoming increasingly concerned for the Eurozone’s largest economy.
Oliver Rakau, Chief German Economist at Oxford Economics, commented on the data:
‘As expected German industrial production fell into an abyss in April, -17.9% m/m. Autos -75% as factories were shut. But a relief is that construction held up (-4.1%) despite nosediving sentiment. A huge difference to [France, Italy, and Spain] where sector was largely shut already in March.’
However, Euro (EUR) traders will be looking ahead to today’s speech from the European Central Bank’s President (ECB), Christine Lagarde. Her comments are expected to echo those during her press conference on Thursday following the ECB’s press conference.
Nevertheless, if Lagarde hints at any further fiscal report for the Eurozone economy, then we could see the EUR/GBP exchange rate edge higher.
Pound (GBP) Steady as Chancellor Sunak to Delay Big Stimulus Package Until Autumn
The Pound (GBP) struggled today on reports that Chancellor Rishi Sunak may delay his big stimulus package of tax cuts and spending commitments until later this year. Consequently, Sterling traders are becoming jittery as Britain’s economy continues to struggle against the coronavirus pandemic.
Britain’s finance ministry commented last week:
‘We will be taking stock of the economic situation, and looking at if and where further support makes sense ahead of the more significant moments in the autumn.’
Meanwhile, Pound (GBP) traders will be looking ahead to this evening’s release of the UK BRC retail sales report for May. However, any signs of further deterioration in the UK’s retail sector would prove GBP-negative.
Sophie Michael, head of retail and wholesale at BDO, commented:
‘As shops look to reopen on June 15, they will face disrupted supply chains, mounting out of season stock and reduced footfall, as well as staffing uncertainty.’
GBP/EUR Outlook: Could post-Brexit Fears Continue to Drag on Sterling This Week?
Euro (EUR) investors will be looking ahead to tomorrow’s release of the Eurozone’s final GDP figure for the first quarter. However, if this shows any further signs of deteriorating, then we could see the single currency fall.
Tomorrow will also see the release of Germany’s trade data for April. Any declines in the bloc’s largest economy would prove EUR-negative.
The GBP/EUR exchange rate will remain sensitive to Brexit developments and the UK’s economic situation this week. As a result, we could see Sterling struggle on fears of a no-deal Brexit deal with the EU at the end of the year.