GBP/EUR falls for the seventh consecutive day as UK economic data releases continue to disappoint!

Arron Morris Currency BrokerWritten by Currency Broker Arron Morris

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GBP/EUR falls for the seventh consecutive day as UK economic data releases continue to disappoint!

GBP/EUR fell for the seventh consecutive day yesterday after another round of weaker than forecast UK economic numbers. The currency pair fell over a cent to €1.3949 during Wednesday’s session, the lowest we have seen the cross since 13th July.

Yesterday’s decline now means the pound has lost over four cents (around 3%) against the single currency in the past week, with the mid-market price falling from €1.4376 since the 5th August. 3% might not sound like much but on a £200,000 trade you will now receive around €8500.00 less compared to a week ago.

GBP/EUR Graph

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So why did the pound fall?

The two major factors behind the pounds losses yesterday can be put down to the UK unemployment and wage growth figures. UK unemployment increased by 25,000 during quarter two, while wage growth only rose by 2.4% from a year ago, compared to the previous reading of 3.2%.

Despite growth in earnings still comfortably sitting well above the UK’s current rate of inflation the weaker than expected numbers helped push the value of the pound down.

Wage growth is one area the Bank of England (BoE) are monitoring closely as they look to increase interest rates in the UK. With last week’s BoE rate vote triggering the start of the pounds decline it will be interesting to see how the Monetary Policy Committee (MPC) view these latest readings.

Chris Williamson, chief economist at Markit said “doves” on the MPC may see the labour market data as confirmation the UK economy has started to slow.

So with that in mind we could see GBP/EUR slide further if UK economic numbers continue to disappoint.

Will GBP/EUR push back above €1.40?

A lot will depend on our friends the Greeks. As my colleague David Worthington mentioned in yesterday’s report Greece have agreed a deal in principle with their creditors. Today will see the Greek government vote on the latest proposal and if pushed through the euros value could easily increase, pushing GBP/EUR down.

As the Greeks get closer to unlocking the new €85billion bailout the risk of them defaulting and leaving the Eurozone reduces. Coupled with the MPC still sitting on the fence and unwilling to give a definitive time frame as to when a rake hike will occur, the chances of trade returning back to the highs of last week suddenly seem slim, but never say never.

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If you have an upcoming requirement to buy or sell euros in the coming months and want to ensure you are making the most from you transfer, contact us today using the details listed below. As experts in foreign exchange we can help you achieve a rate of exchange up to 5% better than those offered by the high-street banks, while at the same time help protect you from any potential adverse market movements.

Today’s data

It’s a relatively quiet day on the data front, apart from the Greek vote the only data of note from the Eurozone comes in the form of German and French CPI numbers. The European Central Bank release the minutes from their latest meeting but I wouldn’t expect the CPI readings or meeting minutes to have any major impact on the FX Market.

We do have some key readings coming from the U.S in the shape of retail and unemployment numbers. Both have the ability to effect the value of the dollar and could have some bearing on the GBP/EUR cross.