ECB Rate Decision, Retail Sales Stats Hurt Pound Euro Exchange Rate

October 20, 2016 - Written by Frank Davies

STORY LINK ECB Rate Decision, Retail Sales Stats Hurt Pound Euro Exchange Rate

Pound Sterling (GBP) Exchange Rate Unsettled after Concerning September Retail Sales Stats

The Pound Euro exchange rate remained trending around the 1.10 level on Thursday.

The day’s major UK economic data has concerned retail sales recorded in September. While some economists have cited annual figures in the area of 4% and 4.1% as good news for the UK economy, the monthly printings of % have triggered greater concern.

Warmer-than-usual weather in September was blamed for the drop, as economists speculated ahead for how the crucial Halloween and Christmas spending periods could play out post-‘Brexit’.

GBP EUR Conversion Rate Predicted to Dip Next Week on Dovish Q3 GDP Predictions

The Pound's performance against the Euro has been less than impressive this week, and there isn't much likelihood of the British currency mounting a sustained rally next week either.

The first major news will arrive on Wednesday, when the Confederation of British Industry (CBI) business optimism index for Q4 is announced; an ‘improvement’ from -47 to -21 has been predicted.

Despite this apparent positivity, Thursday’s Q3 preliminary GDP growth rate stats have the potential to eliminate any prior gains for the Pound.

In addition to predictions being for a slowdown in growth on the year and quarter, extra damage could be done by the fact that Q3 is the first quarter to feature entirely post-Referendum data. This could highlight just how much damage was done to confidence and the UK economy in the aftermath of the ‘Brexit’ vote.

Euro (EUR) Rallies as ECB’s Draghi Leaves QE in Place

The Euro managed to jump against the Pound (GBP) and most other peers today on European Central Bank (ECB) news, though based on close analysis, these gains may well prove a flash in the pan.

As expected, the ECB left interest rates on hold at 0%, as well as keeping the deposit facility rate at -0.4%.

More notably, ECB President Mario Draghi stated that QE would not be tapered, in contrast to previous rumours that triggered Euro volatility. The Euro shot up on the news, after investors concluded that this meant the ECB was not running low on bonds to buy.

Euro Rate Movement Likely to Follow Eurozone Confidence Flash, Bundesbank Speech

While today has brought high-impact Eurozone news, the week is still not over for the single currency bloc, with tomorrow afternoon bringing another major release.

This will be October’s consumer confidence flash, which has been pessimistically predicted to fall from -8.2 points to -8.6.

Ahead of this, Bundesbank President Jens Weidmann is expected to give a speech during the morning, while Greece will also be posting its current account result for August.

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