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GBP/EUR Approaches 10-Year Low UK Growth Contracts

Last week’s high: €1.0957

Last week’s low: €1.0769

UK Growth & Possibility of General Election Drags on GBP/EUR

As markets speculated on the possibility of a UK general election and the likelihood of Boris Johnson pushing through a no-deal Brexit, the GBP/EUR exchange rate remained under pressure throughout the week.

A surprise contraction in the second quarter UK gross domestic product saw further losses in the GBP/EUR exchange rate on Friday.

The -0.2% decline in growth raised fresh concerns for the UK economy, fuelling speculation about a possible recession.

The mood toward the Euro also soured as the German trade surplus narrowed more sharply than anticipated in June.

The single currency fell out of favour as the Eurozone’s powerhouse economy struggled to maintain growth momentum in the face of escalating global trade tensions.

However, that didn’t prevent GBP/EUR from falling to its lowest levels in almost 10 years.

Euro Outlook: Eurozone Economic Sentiment Index Could Boost EUR

August’s ZEW economic sentiment surveys could offer a much needed boost to the Euro this week as forecasts suggest an improvement on the month.

However, if sentiment sinks further into negative territory this could drive fresh losses in Euro exchange rates.

Focus will also fall on the second quarter German GDP, which could spark renewed anxiety about the German economy.

Meanwhile, political news is likely to remain the driving influence on the Pound for the foreseeable future, though a positive UK consumer price index reading could provide a rallying point.

Key Events

13th August

09:30   UK Average Weekly Earnings

10:00   Eurozone ZEW Economic Sentiment Index

14th August

07:00   German Gross Domestic Product

09:30   UK Consumer Price Index

10:00   Eurozone Gross Domestic Product

15th August

09:30   UK Retail Sales

 

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