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Slowdown in Eurozone Construction Triggers Minor Euro Pound Losses

The Euro has marginally worsened against the Pound today, posting a lower exchange rate of 0.8834. This slight dip comes as Thursday’s European Central Bank (ECB) policy meeting draws near.

The ECB is broadly expected to give a cautious or measured outlook on Thursday afternoon, to prevent any wild currency fluctuations.

(First published 12:53, July 19th, 2017)

The Euro has made a minor loss against the Pound today, but remains near the best exchange rate in almost a week.

  • EUR GBP rate dips to 0.8844 – GBP EUR rate rises to 1.1305
  • Euro declines on overall construction slowdown – Trend seen of progressive slowdown
  • Pound advances despite business concerns – Chancellor Hammond praises long-term economy
  • Major ECB policy meeting upcoming – Pound advance possible on UK sales figures

The EUR GBP exchange rate has been trading around 0.8844, following news of slowing construction activity in the Eurozone.

Euro Retains 2017 Strength despite Slipup on Construction Stats

The latest Euro decline has come from news of slowing annual construction in May. While overall levels of construction output are still growing, the latest slide to 2.6% comes as part of a continuing pattern.

In January, Eurozone construction fell by -5.7%. Output rose to 5.3% in February, but since then levels have gradually been dropping off, culminating in May’s 2.6% figure.

Looking at 2017 overall, the Euro remains near its best rate of the year against the Pound, despite the latest dip.

GBP Up as Chancellor Hammond Predicts Trade Balance Recovery

The Pound’s gains against the Euro come in spite of falling UK business confidence. With economists predicting a UK economic slowdown, businesses have been clearly worried about the near and longer-term future.

According to a recent Association of Chartered Certified Accountants (ACCA) report, most surveyed UK businesses are not yet prepared for a post-Brexit Britain, which has caused further concern.

The one ray of sunshine has come from Chancellor Phillip Hammond, who has declared that UK exporters could become more competitive thanks to a weaker Pound. This would go some way to balancing the UK’s trade deficit, which has remained relatively large for years.

Euro Slump Possible if ECB Turns Neutral

Thursday will bring high-impact Eurozone and UK news, which has the potential to see the EUR GBP exchange rate slide.

The strongest Euro-influencer will be the afternoon’s European Central Bank (ECB) policy meeting. As with recent months, the ECB is not expected to raise interest rates from 0%.

Given the turbulence generated by ECB President Mario Draghi’s comments in June, the President may deliver more standard remarks this time which don’t suggest any imminent policy changes.

Also out will be July’s consumer confidence flash for the Eurozone. A slight improvement is predicted, which may offset the negative effect of any ECB neutrality.

UK news on Thursday will cover retail sales in June. Figures are expected to rise, which may trigger a GBP EUR advance. More sales would provide a credible counter to the ongoing UK wage squeeze, which is feared to damage consumer spending in the long-term.

Current Interbank EUR GBP Exchange Rates

At the time of writing, the Euro to Pound (EUR GBP) exchange rate was trading at 1.1305 and the Pound to Euro (GBP EUR) exchange rate was trading at 0.8844.