The Euro flopped against the Pound on Thursday but stands to rebound on today’s positively-predicted Eurozone retail sales figures.
- EUR GBP up from 0.84 to 0.85 this week – GBP EUR rate down from 1.17 to 1.16
- Euro rise possible on sales stats today – Key Eurozone PMIs also set to increase
- Pound losses possible if services PMI slips – House of Lords amendment remains in focus
- ECB rate decision due next week – Limited spread of UK data could leave Euro dominant
The main focus for Euro traders today will be retail sales figures for both the Eurozone and Germany.
Forecasts have been optimistic on both counts, with the monthly and annual German sales expected to rise out of negative ranges and the same predicted of monthly Eurozone sales.
The day’s other high-impact Eurozone news will cover services and composite PMIs for February, which are both set to be revised up in their final forms.
Should all of the day’s Eurozone PMIs and sales figures rise, the Euro could well rally against the Pound ahead of next week’s European Central Bank (ECB) interest rate decision.
The ECB has been in focus this week thanks to the recent rise in Eurozone inflation. With the annual flash figure climbing from 1.8% to 2%, the rate of inflation currently rests just above the ECB’s target of ‘below 2%’.
In spite of this, however, the ECB is expected to leave interest rates untouched on March 9th, owing to caution about hiking prematurely, as was seen in mid-2011.
On the Pound side, Sterling could drop sharply when the UK services PMI for February is released.
As the biggest of the UK’s economic sectors, the services sector has a strong influence over the Pound’s value, so if it drops as forecast, the GBP EUR exchange rate could easily enter the weekend trending lower.
Looking ahead to next week, the main scheduled UK news will be Friday’s trade balance for January, which previously showed a deficit of -3.30bn.
Sterling could potentially also be shifted by developments from the Houses of Parliament – MPs in the Commons may vote on the recent amendment on EU citizens’ rights, and the Pound could crash if they reject the amendment as forecast.
This is due to the negative implications for the eventual official Brexit negotiations – if the position of EU citizens is not assured going into talks, EU leaders may be less inclined to secure the positions of UK citizens living as expats across the EU.
Current EUR GBP Interbank Exchange Rates
At the time of writing, the Euro Pound (EUR GBP) exchange rate was trading at 0.85 and the Pound Euro (GBP EUR) exchange rate was trading at 1.16.