Pound Sterling to Euro Exchange Rate Dives after PMIs Plummet

July 21, 2016 - Written by John Cameron

STORY LINK Pound Sterling to Euro Exchange Rate Dives after PMIs Plummet

Sterling has been shattered by two negative data days in a row; the latest of these damaging announcements has been the manufacturing, composite and services PMI flashes for July.

While the Pound has managed to recover a number of its losses today, Sterling has nonetheless remained down against the Euro.

Disappointing UK Retail Sales Pushed GBP Exchange Rates Lower

The already under-pressure Pound Sterling (currency : GBP) received another body blow earlier today with the publication of June’s UK Retail Sales data. The headline year-on-year figure showed at a below expectations 3.9%, when analysts anticipated a showing of 4.8%.

However, it was the month-on-month version which caused most alarm amongst Sterling holders, printing at -0.9% versus an anticipated -0.6%.

The Office of National Statistics (ONS), which publishes the closely-monitored numbers, noted in its accompanying report that,

‘non-seasonally adjusted data show that the prices of goods sold in the retail industry (as measured by the implied price deflator) decreased by 2.5%; this was the 24th consecutive month of year-on-year price falls.’

The ONS went on to paint a bleak picture of the current state of play in the UK’s retail sector, and in particular in the sale of comestibles, noting that,

‘In June 2016 compared with May 2016, 2 of the 4 main retail sectors (food stores and non-food stores) saw a decrease in the quantity bought (volume), while 3 of the 4 main sectors (non-store retailing, non-food stores and food stores) saw a decrease in the amount spent. The largest downwards contribution for both quantity bought and amount spent came from food stores.’

The data, which almost entirely covered the period before UK voters came out in favour of Brexit, has caused leading analysts to express their concerns about what might happen to the domestic economy in the months to come when economic participants fully factor-in the reality that Britain will be leaving the European Union.

Elsewhere, there was some rather less bad news regarding the UK’s public finances earlier today when government figures revealed that the level of Public Sector Net Borrowing (PSBR) stood at GBP7.3 bn last month versus an expected GBP9.3 bn.

The outcome helped the Sterling to euro exchange rate remain above the 1.1900 GBP EUR throughout the session.

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TAGS: Euro Forecasts Pound Euro Forecasts Pound Sterling Forecasts