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GBP/EUR Hits Fresh Ten-Month Low

Yesterday’s high: €1.1079

Yesterday’s low: €1.1033

Euro Gains Ground Despite Weaker German Production

While German industrial production showed an unexpected contraction on the month in June this failed to have any particularly detrimental impact on the Euro.

Investors were willing to overlook this weaker showing as the monthly production data has proven volatile in the past.

As this looked unlikely to be the start of a significant downturn in German industry, the GBP/EUR exchange rate was unable to capitalise on the poor data.

A smaller-than-expected dip in the Eurozone Sentix investor confidence index also helped to boost the appeal of the single currency, even as sentiment softened.

Demand for the Pound, meanwhile, diminished on the back of an unimpressive Halifax house price index, which pointed towards a loss of momentum within the domestic housing market.

This suggests that consumer confidence is continuing to come under pressure in the absence of any particular clarity over the matter of Brexit.

Conflicting reports over a proposed 40 billion Euro exit bill and the government’s willingness to pay such a sum added to the softness of the Pound on Monday.

With the majority of British voters found to disapprove of May’s approach to Brexit negotiations in an ORB International poll, the prospect of a smooth exit remains questionable at best.

Euro Outlook: Volatility Likely in Response to Wider German Trade Surplus

In a relatively data-light week the GBP/EUR exchange rate could see some volatility in response to June’s German trade data today.

Markets are expecting to see the trade surplus widen from 22 billion to 23 billion on the month; a result which would underline the continued strength of the Eurozone’s powerhouse economy.

That being said, as forecasts point towards a marked dip in exports the report could actually prove to be less than encouraging for the single currency.

A widening German trade surplus could also weigh on the Euro if investors show greater concern over the potential negative implications this could have for its Eurozone neighbours.

However, if global geopolitical tensions continue to mount, this may encourage the GBP/EUR exchange rate to lose further ground.

Key Events

8th August

07:00 German Trade Balance


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Thomas Taylor

Currency Dealer

T: (0) 1442 892 074

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