Resilient Eurozone Retail Sales Buoy Euro Against the Pound

Last week’s high: €1.1150

Last week’s low: €1.0888

Retail Sales Surge Offers Euro Boost

Eurozone retail sales saw a solid improvement in June, giving the Euro a boost against its rivals ahead of the weekend.

With consumer spending holding up, the impact of Thursday’s underwhelming raft of Eurozone manufacturing PMIs diminished. .

Thanks largely to a weak inflation outlook, investors still expect to see the European Central Bank (ECB) cut interest rates in the coming months.

While the German consumer price index bettered forecasts with a surprise uptick on Tuesday, this failed to undermine bets on the prospect of imminent policy loosening.

The GBP/EUR exchange rate remained on the back foot over the course of the week, struggling to escape a 23-month low amid ongoing Brexit anxiety.

As July’s UK manufacturing and construction PMIs both showed fresh signs of a slowdown, the mood toward Sterling was further soured.

Euro Outlook: German Industrial Deterioration May Reverse Euro Gains

June’s German factory orders data could impose a significant dampener on the Euro this week.

After sharp contractions seen in May, investors are wary of the potential for a continued decline in production.

So unless the Eurozone’s powerhouse economy can demonstrate greater resilience in the face of ongoing global trade worries, the single currency looks set to falter.

A weak German industrial production figure could also weigh heavily on Euro exchange rates in the days ahead.

However, the GBP/EUR exchange rate could potentially extend its losses on the back of Monday’s UK services PMI.

If the service sector also shows fresh signs of losing momentum, the Pound could fall further out of favour with investors.

Key Events

5th August

09:30   UK Services PMI

6th August

07:00   Germany Factory Orders

7th August

07:00   Germany Industrial Production

9th August

07:00   Germany Trade Balance

09:30   UK Trade Balance

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