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GBP/EUR Close to 9-Month Low

Last week’s high: €1.1206

Last week’s low: €1.1046

Euro Slumps on Weaker Eurozone Retail Data

Ahead of the weekend the Euro came under some pressure thanks to a sharp resurgence in the US Dollar, as the latest US labour market data bettered expectations.

Rising bets that the Federal Reserve could be encouraged to raise interest rates before the end of the year weighed on the Euro, particularly as the European Central Bank (ECB) looks set to maintain a dovish outlook.

Confidence was also dented on Friday by a disappointing raft of Eurozone retail PMIs, which pointed towards a significant loss of momentum within the sector.

This gave markets little reason to favour the Euro, but GBP/EUR remained close to 9-month lows in the wake of Thursday’s Bank of England (BoE) interest rate decision.

The underlying bias of the Pound also remained to the downside as Brexit-based uncertainty persisted.

A sharp slump in new car sales in July suggests that UK consumers are not in a particularly confident state, something that does not bode well for the health of other economic indicators.

With expectations for the BoE to return to a monetary tightening bias significantly diminished, the Euro may be able to push higher still against the Pound this week.

Euro Outlook: Widening Greek Deficit Could Increase Downside Pressure

Demand for the single currency could pick up today if the latest German industrial production figures prove positive.

However, if output shows any signs of slowing, this could give the GBP/EUR exchange rate the opportunity to gain further ground.

June’s Greek trade balance data may also diminish the appeal of the Euro, with markets still somewhat jittery over the outlook of the Hellenic Republic.

Any widening of the Greek trade deficit is unlikely to go down well with investors, even though worries over bailout repayments have eased significantly in the last month.

Support for the Pound could prove rather lacking, meanwhile, as UK data is rather thin on the ground in the early week.

Any fresh developments surrounding the chaotic Trump White House could provoke additional volatility for the GBP/EUR exchange rate in the coming days.

Key Events

7th August

07:00 German Industrial Production

10:00 Greek Balance of Trade

 

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Alistair Ryan

Currency Dealer

T: (0) 1442 892 061 

 

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